The shares of Life Insurance Corporation of India (LIC) declined more than 26% after their market debut on May 17, 2022, and reached an all-time low of ₹ 645.00 apiece on Friday’s intraday trade. The state-owned insurance company’s shares are trading 32.03% below their issue price of ₹ 949 per share.
LIC, India’s biggest life insurer, continued underperforming the market with a wide margin since its listing. The stock shed 3.62% in the past month as compared to a 1.17% decline in the BSE Sensex. LIC proved to be a wealth destroyer and its shares contracted ever since their listing on the bourses.
The insurance gargantuan reported slower growth of 5.2 per cent in retail annualized premium equivalent (APE) for August 2022 as against 8.9 per cent CAGR for the private sector, on a year-to-date basis. Its growth was materially lower than that of the private sector at 12.6%.
Axis Capital initiated coverage on LIC and suggested a buy rating on its shares with a target price of ₹ 900.00. The shares were trading at ₹ 646.20 apiece at 01:14 PM on Friday and the given target translates to an upside of 39.28%.
In its research report, it mentioned that LIC, the market leader in India’s life insurance space, is shifting focus to profitable segments (NPAR/protection products), a higher share of an individual business, and omnichannel distribution (Banca/digital partnerships).
Geojit Financial Services
Geojit Financial Services has assigned a buy rating on its shares with a target price of ₹ 810.00, based on 0.8x FY24E EV per share. This implies an upside of 25.35% as compared to its share price.
According to analysts at Geojit Financial Services, LIC saw a recovery in its market share in the latest quarter and will continue to maintain its dominant position for a very long time. Further, they added that government backing and a robust investment portfolio remain favourable factors and ensure that the company will continue to perform well in the long term.
The brokerage added that the company’s focus on increasing the contribution from high VNB margin products bodes well for its long-term performance in spite of a marginal slowdown in the new business margin growth expected in the near term.
Written by Simran Bafna
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