LIC share price drops 33% against IPO price: Analyst lists six reasons why you should buy this insurance stock; check TP

LIC Share Target Price: Shares of Life Insurance Corporation (LIC) ended nearly one and half per cent higher to Rs 629.20 per share on the BSE on Tuesday. The counter of the insurance behemoth has been trading at 31.6% discount from its 52-week high, while the scrip is trading lower by 33.7% on its IPO price.  

LIC shares traded at a 52-week high value of Rs 920 in May 2022 after weak listing on the exchanges. Shares of LIC were listed at a discount of nine per cent to Rs 867.20 per share on the BSE against its IPO price of Rs 949.  

Stock of the Insurance giant has been hitting 52-week low one after another and touched a new low of Rs 617 on 29th September recently.  

Meanwhile, LIC has emerged as a wealth destroyer since its tepid listing. Listed with a market capitalisation of 6 lakh crore, the insurance firm's current market cap has reduced to 3.97 lakh crore as on October 4. It implies that the investors have lost over Rs 2 lakh crore in LIC shares. During the listing, LIC was the fifth biggest company in terms of market-cap after Reliance Industries Ltd (RIL), Tata Consultancy Services (TCS), HDFC Bank, and Infosys.  

Even though the share has declined over 33% on its IPO prices and continues to trade with volatility, should you buy this insurance stock?  

LIC Share Target Price

Well, brokerage house Yes Securities sees over 35% upside in the counter from current levels.  

Initiating a coverage on the stock, the brokerage recommended a buy rating on LIC with a target price of Rs 850 per share.  

Shivaji Thapliyal, Head of Research & Lead Analyst at Yes Securities listed six reasons supporting its recommendations: 

1. LIC has nurtured an agency force whose productivity is far higher than that for private sector peers  

2. While the contribution of bancassurance is proportionately still low, LIC has assembled the largest bancassurance network in the industry  

3. Focus hitherto on Par business led to several business model advantages for LIC 4. LIC has a sticky customer profile reflected in superior persistency and surrender outcomes  

5. LIC is displaying a pivot towards shareholder focus as (a) it diversifies into the higher-margin Non-Par segment and (b) surplus distribution has already been changed incrementally in favour of shareholders  

6. LIC has displayed reasonable expense control outcomes. 

LIC raises stake in Dr Reddy's

Earlier, LIC in a regulatory filing on Monday said that the Corporation’s shareholding in Dr Reddy's Laboratories Increased from 93,96,801 to 1,27,83,287 equity shares. With the addition of fresh shares, LIC raised its stake in the company from from 5.6% to 7.6%