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It’s taken almost two years but a 75% rally since late March has brought investors who purchased shares of Life Insurance Corp. of India in the nation’s biggest initial public offering close to recovering their investment.

The state-owned life insurer’s stock climbed 1.9% Tuesday, to close at its highest level since its IPO in May 2022. The climb over the past 10 months has coincided with a broader surge in Indian equities that’s added some $30 billion to LIC’s market value.  

Prime Minister Narendra Modi’s government raised a record $2.7 billion by selling shares in the country’s largest life insurance firm to investors that included millions of families that own the company’s policies. Concerns over LIC’s size, low-profit margins and rigid sales model compared with more agile private peers saw the stock at one point fall more than 40% below its offering price.

Gains in India’s broader equity market have been a boon to LIC, also the country’s largest investor with funds of more than $100 billion. An improved outlook for its premium business and prospects of a higher dividend payout has also spurred interest in the shares, according to analysts.

“The rally in shares seems to be largely driven by a highly attractive valuation, which is already more than pricing in the structural challenges,” said Avinash Singh, an analyst at Emkay Global Financial Services Ltd. who advises buying the stock. An accumulated cash pile also suggests a higher dividend payment is possible, he added.

Still, according to Antique Stock Broking Ltd., the firm’s low growth, high costs and bleeding of market share will see the stock continue to trade below an estimated embedded value — a measure for shareholder value of the company — of 7.1 trillion rupees ($85.73 billion).

(Updates stock price.)

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