A year after listing, India’s Life Insurance Corporation (LIC) will perform foreign roadshows in Hong Kong later in June. According to reports, the LIC non-deal roadshows will occur between June 25 and June 29, with the meeting in the United Kingdom (UK).

If we take the sources, these roadshows aim to raise awareness in global investors following the listing of Life Insurance Corporation shares. The non-deal roadshows will provide investors with an in-depth look at the company’s story. It also seeks to improve communication between the management team and investors. Sources hint that the top management will interact with global investors over a five-day period in a series of meetings designed to emphasise the company’s strengths. The management will encourage investors to invest in Scrips because the company has a lot of potential.

Last year, the government raised ₹ 20,557 crore by diluting its 3.5 per cent ownership in the LIC in the country’s largest-ever IPO. On May 17, 2022, the shares were listed on the BSE at an 8.62 per cent discount to the issue price of ₹ 949 per share, at ₹ 867.20 per share. The stock is at present down roughly 40% from its IPO issue price of ₹ 949 for each share, bringing the entire market value depreciation to around ₹2.5 lakh billion. Through the IPO, the government sold approximately INR 22.13 crore shares, or 3.5 % stake in LIC. The issue’s price range was ₹902-949 per share. However, on May 12, 2022, investors received shares in the top price range.

Expert opinion about LIC listings.

According to Rockstud Capital principal officer Rikesh Parikh, LIC’s top management has stated that the insurer’s non-par portfolio will be expanded, resulting in larger commercial margins. 

LIC’s total net profit more than fivefold increased to ₹13,191 crore for the fourth quarter ending March 2023, up from ₹2,409 crore in the same quarter last year.

LIC’s net profit more than tripled to ₹35,997 crore for the fiscal year 2022-23, up from ₹4,125 crore the previous year.

For the financial year terminating on March 31 2023, the board of directors has advised a final dividend of ₹3 per equity share with a face value of ₹ ten each.

Tough days ahead.

The company shares dropped due to its investment in the Adani company, but this was more of a theoretical loss than a real one. Adani stock has risen since April, as has LIC. However, the road ahead is challenging.

LIC has been losing market share since the insurance sector was opened to the private sector in 2000. Based on first-year premium income, its market share has dropped to around 60%. Analysts anticipate that this figure will reduce further if private sector companies grow quicker. However, there are several instances where the company still has an advantage. It has a broad reach and a large share of participating policies, allowing policyholders to profit through incentives or payouts.

Private insurers have a higher proportion of margin-accretive term policies than LIC. However, the return on embedded value (a measure used to assess insurance companies based on discount rates) for LIC is low at 10.9% and higher for private players. The company is selling at 0.5 times its expected value for FY25, or 70% less than its peers.

Conclusion.

According to this rationale, many investors believe LIC is similar to the old State Bank of India. SBI traded at a shallow price/book value compared to its peers for a long time. However, it has been the best-performing financial stock during the last two years. The same argument applies to the Life Insurance Corporation, regarded as a deep-value stock. But that is a simple comparison. To receive a rerating, it must demonstrate consistent growth in its embedded value (EV) for at least two years. It had a solid FY23, but this momentum must be maintained if shareholders are to take the company seriously.

Proofread & Published By Naveenika Chauhan