Finace And Stock

How ITC, other top stock bets of ​insurance cos delivered in 2021

NEW DELHI: Seven of the 10 biggest stock bets of domestic insurance companies in the BSE500 pack have failed to beat index returns year to date. That’s when six out of every 10 BSE500 stocks managed to outshine the index during this period.

The median price targets for most of the insurers’ favourite stocks suggest only single-digit upside potential over the next 12 months. The insurers — who tend to be long-term investors in stocks — owned 13-22 per cent stakes in these 10 stocks at the end of June quarter.

is the biggest stock bet in percentage terms for these insurers with 21.51 per cent holding. The stock has delivered 12 per cent return year to date, even as ITC’s valuation discount to its FMCG peers hit a record high. A 12-month median estimate of 34 analysts pegs the stock value at Rs 256.63, suggesting a mere 8 per cent potential upside.

Larsen & Toubro, their second biggest holding in terms of percentage, is up 32 per cent, which is largely in line with BSE500’s 30.27 per cent rise this year. The median price target of 39 analysts suggests an 11 per cent potential upside for this stock.

The South Indian Bank, the third biggest bet, delivered 13.17 per cent return. Insurers owned 16.5 per cent stake in this private bank, according to data compiled from corporate database AceEquity.

The median 12-month price target suggests no upside for this stock. Another favourite of the insurers, NMDC, delivered 25 per cent return this year. They owned over 15 per cent stake in the mineral producer. Median estimate of 20 analysts, however, projects 37 per cent potential upside for this stock.

Castrol India is up 14 per cent year to date. Insurers held 14.14 per cent stake in this firm. This stock may offer single-digit potential upside, a median estimate of analysts’ price targets showed.

MTNL shares have risen a mere 2 per cent this calendar. Insurance companies held 13.66 per cent stake in the telecom services provider as of June 30, even as mutual funds and foreign portfolio investors (FPIs) refrained from investing in it. LIC alone held a 13.12 per cent in the state-run firm at the end of June quarter.

Bosch delivered 21 per cent return and analyst estimates suggest only limited upside. Insurance companies owned 12.89 per cent stake in the firm.

Only three insurance-heavy stocks deliverednstrong returns; NTPC 42 per cent, Hindustan Aeronautics 60 per cent and Tata Chemicals 93 per cent. Insurers owned 13-15 per cent stakes in these companies. Median price targets of analyst estimates suggest no further upside for NTPC, 25 per cent potential upside for Hindustan Aeronautics and 29 per cent for Tata Chemicals.

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