LIC is world’s cheapest insurance stock in terms of valuations: Zee Business research report

With the tepid listing on exchanges, the Life Insurance Corporation of India (LIC) stock has become the world’s cheapest insurance stock on the back attractive valuations, Zee Business Senior Research Analyst Varun Dubey said in his report on Tuesday. 

Shares of LIC made a weak debut at a nearly 9% discount on the BSE and NSE on Tuesday. They got listed at Rs 867 per share on the BSE and Rs 872 per share on the NSE, against the issue price of Rs 949 per share at the upper price band. 

The market capitalization to Indian Embedded Value (M-cap/IEV) of LIC is cheapest at around 1 and 1.05 (with respect to 5% correction from issue price) as against other private life insurance firms such as HDFC Life (4.1 M-cap/IEV), SBI Life (2.8 M-cap/IEV) and ICICI Pru Life (2.4 M-cap/IEV), highlighted Dubey. 

In comparison, LIC’s valuations are one-fourth of HDFC Life’s valuations, the research analyst said.  

कैसा है LIC का वैल्यूएशन?

LIC Vs ग्लोबल इंश्योरेंस कंपनियां..

भारतीय इंश्योरेंस कंपनियां Vs LIC

भारतीय और ग्लोबल इंश्योरेंस कंपनियों के मुकाबले कैसा है LIC का वैल्युएशन, जानिए वरुण दुबे से..@VarunDubey85 #LICIPOWithZee #LICIPO pic.twitter.com/ASXuQr6u9u

— Zee Business (@ZeeBusiness) May 17, 2022

The valuations of the public insurer are also cheaper than its global counterparts as AXA SA has 1.1-1.2 M-cap/IEV, while AIA, Zurich Insurance, and Alliance have M-Cap/IEV between 1.1-1.9. 

Zee Business Managing Editor Anil Singhvi, in his post listing view, reiterated that the tepid listing was in-line with the expectations, and he suggested a buying of 1500 to 2000 crore is needed, which may come from retail and high net investors. 

According to Singhvi, the listing of LIC below issue price is mainly due to pressure from retail investors, as institutional investors generally keep a long-term view.  

Minutes after listing, the stock made a high of Rs 920 per share, up over 6 per cent intraday on the BSE. It was trading over 3.5 per cent higher at Rs 898.8 per share at around 11:25 AM as compared to over a 1.29 per cent rise in the S&P BSE Sensex. 

The initial public offering of the public insurer, which remained open between May 4 and 9, was subscribed 2.95 times on the last day. Against 16,20,78,067 shares on offer, the state-run insurer received bids for 47,83,67,010 shares.