US-Iran Conflict Wipes Out Rs 70,000 Cr From LIC Portfolio

The BSE Sensex and the Nifty 50 declined around 4.5 per cent each since the start of the West Asia conflict.

India's State-run insurance behemoth and one of the largest domestic institutional investors Life Insurance Corporation (LIC) has seen an erosion of Rs 70,105 crore in its stock portfolio amid the US-Israel-Iran war.

The biggest casualties have been banking stocks along with Larsen & Toubro (L&T), suggests data.

LIC's portfolio stood at Rs 14.17 trillion as on March 9, from Rs 14.88 trillion on February 27, 2026 -- a day before the war bugle sounded. That marks a fall of 4.7 per cent or Rs 70,105 crore, data showed.

The calculations are based on the shareholding data compiled from ACE Equity, where LIC held over 1 per cent equity stake.

Meanwhile, on a year-till-date (YTD) basis LIC's total portfolio loss stands at 7.1 per cent, or Rs 1.08 trillion, as of March 9, 2026.

The BSE Sensex and the Nifty 50 had declined around 4.5 per cent each since the start of the West Asia conflict.

Compared to the frontline benchmarks, the losses in mid and smallcaps were steeper with the Nifty MidCap index and the Nifty SmallCap index slipping around 5 per cent each during this period.

Banks among worst hit

Over one-fifth (21.8 per cent or Rs 15,293 crore) of LIC's losses, data suggests, were due to a sharp fall in the stocks of State Bank of India, ICICI Bank and HDFC Bank.

That apart, L&T alone saw nearly 11 per cent fall (Rs 7,609 crore) in the insurance behemoth's equity portfolio during this period.

Banking stocks, according to G Chokkalingam, founder and head of research at Equinomics Research, were among the hardest hit, as the war stoked inflation fears and the probability of hike in interest rates, going ahead.

"Possibility of higher inflation due to a rise in oil prices, coupled with fear of higher (interest) rates would have dented banks' earnings. That apart, most banking stocks, especially SBI, did well at the bourses in the last few months. All this triggered a slide in banking stocks amid the geopolitical conflict," he said.

L&T: Significant West Asia exposure

Among other stocks, L&T, where LIC holds 12.7 per cent stake, plunged sharply as West Asia is one of the key markets for the company, analysts said.

In the Q3 FY26 earnings conference call on January 28, 2026, L&T said that out of the international order book of Rs 3.57 trillion, West Asia accounted for around 75 per cent.

Within the West Asian region, L&T has the largest exposure in Saudi Arabia, where hydrocarbon sites are under execution, while renewable and Power transmission and distribution (T&D) operations are spread across the region, an Emkay Global note said.

While it is difficult to assess the current situation, L&T's core earnings could be negatively impacted by 11-12 per cent for FY27E/28E, assuming a three-month execution delay and low order inflow, mainly in the hydrocarbon segment, the report suggested. This is owing to the conflict.

'We see around 10 per cent impact on the FY26 order inflow. For L&T, 12,000-15,000 workers are presently working in West Asia. We see potential risk in terms of execution delay and deferral of fresh awarding in the near term. The stock has reacted negatively, and the core business is trading at FY27/28E P/E of 23/19x. Retain 'Buy' rating, with sum-of-the-parts (SOTP)-based target price of Rs 4,800,' wrote Ashwani Sharma and Abhishek Taparia, analysts tracking the company at Emkay Global.

Those at Motilal Oswal, too, remain bullish on the L&T stock from a long-term perspective but caution against near-term headwinds.

'We adjust our core business valuations to 25x (from 27x) to bake in the current volatile scenario for now and arrive at a revised two-year forward target price of Rs 4,400 (Rs 4,600 earlier). Retain buy rating,' they said in a recent note.

Feature Presentation: Aslam Hunani/Rediff