Ajcon Global IPO report on Life Insurance Corporation of India
Life Insurance Corporation of India (“LIC”) was established on September 1, 1956, under the LIC Act by merging and nationalizing 245 private life insurance companies in India. LIC has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 61.6% market share in terms of premiums (or GWP), a 61.4% market share in terms of New Business Premium (or NBP), a 71.8% market share in terms of number of individual policies issued, a 88.8% market share in terms of number of group policies issued for Fiscal 2021, as well as by the number of individual agents, which comprised 55% of all individual agents in India as at December 31, 2021. LIC had the highest gap in market share by life insurance GWP relative to the 2nd largest life insurer in India as compared to the market leaders in the top seven markets globally (in 2020 for the other players and in Fiscal 2021 for the LIC). LIC is ranked 5th globally by life insurance GWP (comparing the LIC’s life insurance premium for Fiscal 2021 to the global peers’ life insurance premium for 2020) and 10th globally in terms of total assets (comparing the LIC’s assets as at March 31, 2021 with other life insurers’ assets as at December 31, 2020). LIC is the largest asset manager in India as at December 31, 2021 with AUM of Rs. 40.1 trillion, on a standalone basis which is 1.1 times the entire Indian mutual fund industry’s AUM.
Valuation and Outlook
At the upper end of the price band of ₹949, LIC's IPO is valued at Implied Market Cap/Indian Embedded Value (as on H1FY22) of 1.1x at which is at a discount to its peers like SBI Life Insurance Company Limited, HDFC Life Insurance Company Limited, ICICI Prudential Life Insurance Company Limited which are trading in the range of 2.5 ‐ 4x. We recommend investors to "SUBSCRIBE" to the issue owing to the following factors: a) Fifth largest life insurer globally by GWP and the largest player in the fast growing and underpenetrated Indian life insurance sector.
For all IPO stories, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.