LIC receives a tax refund of Rs 21,741 crore from the Income Tax department; ₹3,700 crore pending

India’s second-most valued state company, the Life Insurance Corporation (LIC), has received over Rs 21,740 crore in refunds from the income-tax department, with another Rs 3,700 crore pending. These funds would enhance the state-run insurer’s bottom-line, further solidifying its position as India’s largest institutional investor.

The refunds are linked to income tax litigation concerning surplus utilization and the treatment of interim bonuses, as disclosed in customary filings with the stock exchange.

From a cash flow perspective, LIC anticipates receiving Rs 25,464 crore.

Between FY13 and FY20, LIC received refund orders totaling ₹25,464.46 crore, of which ₹21,740 crore was released by the Income Tax Department on February 15. LIC is actively pursuing the balance with the tax authorities. On Friday, LIC shares dropped by 1.52% to ₹1,039 on the BSE, while the benchmark index saw a 0.52% rise.

During the December quarter, LIC made significant profits by selling a record $4.7 billion worth of shares of listed domestic companies, benefiting from the market’s bullish trend and all-time high share prices.

A recent study based on regulatory filings revealed that the state-owned insurer divested portions of its investments in around 100 leading listed companies. The total value of these divestments, calculated using the volume-weighted average price for the October-December period, amounted to ₹39,163 crore, marking the highest ever in the third quarter of a financial year.

During the December quarter of FY2024, LIC recorded a remarkable 49% year-on-year surge in net profit, reaching ₹9,444.4 crore compared to ₹6,334.2 crore in the corresponding period of the previous year. This improved performance was primarily attributed to an increase in net income from investments and a rise in net premium income. Notably, the insurer’s net premium income expanded by 4.6%, reaching ₹1.17 trillion compared to ₹1.11 trillion in Q3 FY24.

The company’s board recommended an interim dividend of ₹4 per share for FY24, scheduled for February 21, 2024, as the record date. Moreover, LIC’s net income from investments in the December quarter surged by 12% year-on-year to ₹95,266.8 crore from ₹84,869 crore in Q3FY2023. However, management expenses saw a significant 32% year-on-year rise to ₹18,193.8 crore.

LIC’s shares decline, leading to a loss of ₹26,217 crore

The market capitalization of India’s six most valuable companies suffered a significant blow on Friday, despite a notable uptick in stock market indices. These companies collectively lost over ₹71,414 crore in wealth, with LIC and Tata Consultancy Services (TCS) being the worst performers.

Among the top 10 firms by market value, LIC, TCS, ITC, Hindustan Unilever, Bharti Airtel, and Reliance Industries experienced a combined wealth reduction of ₹71,414.03 crore.

LIC’s market worth plummeted by ₹26,217.12 crore to ₹6,57,420.26 crore on Friday, as its shares plunged by over 1.5 percent.

Approval by the board for distributing dividends

Given these positive financial results, LIC’s board approved an interim dividend of Rs 4 per equity share for FY 2023-24, showcasing confidence in the company’s financial health and benefiting its shareholdersGiven these positive financial results, LIC’s board approved an interim dividend of Rs 4 per equity share for FY 2023-24, showcasing confidence in the company’s financial health and benefiting its shareholders.

Conclusion

LIC’s significant tax refund, strong financial performance, and careful dividend distribution demonstrate its commitment to financial responsibility and creating value for stakeholders. These factors inspire confidence in LIC’s ability to maintain growth and provide lasting value in changing market environments.

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