The top five midcap stocks that LIC holds

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Midcap stocks have outperformed the benchmark indices in 2023. These high-growth companies are often picked up by institutions based on factors such as liquidity and valuation. Currently, the wind is flowing towards midcaps and smallcaps as compared to largecaps as euphoria is still building up in the broader market.

Continuing our series on LIC’s top holdings, we look at the insurance behemoth’s top midcap picks today. Let’s start with LIC’s housing finance arm, in which it has a stake of more than 45%. Incorporated in 1989, LIC Housing Finance (LICHFL) is among the country's oldest housing-finance companies.

LIC, as the country's biggest insurance provider, enjoys significant brand-recognition and trust. LICHFL benefits from this and has strong brand recall among Indian consumers. The association with LIC also boosts the company’s reliability with respect to the custody of documents until the property remains mortgaged during the loan tenure.

Besides lending its brand power to the company, LIC also plays a major role in mobilising its large agent network for LICHFL. LIC's backing not only allows LICHFL to use its huge network of agents to originate loans but also source funds at competitive rates. It is also able to raise funds at cheaper rates as its borrowing programs are given strong credit ratings.

As of September, LIC holds a 45.2% stake in the company. This promoter holding has remained constant over the years. Mutual funds have also taken a fancy to the stock, having loaded up on LICHFL shares for seven consecutive quarters before paring their stakes somewhat in the most recent quarter.