The share price of India’s largest domestic institutional investor (DII) gained nearly 5 percent after a brokerage shared a target with a huge upside. At 12:44 PM on Thursday, its shares were trading at ₹ 677.95 apiece.
The Life Insurance Corporation of India (LIC) is India’s largest DII and insurance provider. It has a market share of above 66.2 percent in new business premiums. It offers products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products.
According to reports, the country’s insurance regulator has set a new deadline of July 2024 for the launch of Bima Sugam and has also formed a panel of insurers for its execution.
LIC’s management reiterated a focus on selling more profitable products such as non-par plans, specifically protection and annuity plans. In fact, the company has introduced two non-par products during the June quarter.
In another development, LIC said that it has decreased its shareholding in Welspun Corp Ltd from 1,89,68,840 to 1,36,06,752 equity shares or from 7.252 percent to 5.202 percent of the paid-up capital of Welspun Corp. The reduction in stake happened from November 10, 2022, to September 04, 2023. The company’s share price has increased by 46 percent during this period.
In a separate filing, LIC informed that it has infused an incremental capital in LIC Mutual Fund Asset Management Ltd in Rights Issue pursuant to the scheme of merger transaction of IDBI Mutual Fund with LIC Mutual Fund Asset Management Ltd. It infused ₹ 24.75 crore for 956 rights shares in LIC Mutual Fund Asset Management Ltd at a price of ₹2,58,851 each.
Citi has a target price of ₹ 1,045 apiece on the stock. This translates to an upside of 54.14 percent as compared to its share price of ₹ 677.95 apiece. Meanwhile, Kotak Securities has a target of ₹ 1,000 on the stock, indicating an upside of 47.50 percent as compared to its share price.
With a market capitalization of ₹ 4,28,835 crores, LIC is a large-cap company. It has a low return on equity of 0.83 percent. Its shares were trading at a price-to-earnings ratio (P/E) of 9.32, which is lower than the industry P/E of 12.27, indicating that the stock might be undervalued as compared to its peers.
The President of India holds a 96.50 percent stake in the company, followed by retail investors with a 2.66 percent stake, mutual funds with a 0.57 percent stake, other domestic institutions with 0.19 percent and foreign institutions with a 0.08 percent stake.
Written by Simran Bafna
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