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Subscribe to Life Insurance Corporation of India: Religare

Religare has come out with its report on Life Insurance Corporation of India. The research firm has recommended to ''Subscribe'' the ipo in its research report as on April 28, 2022.

April 28, 2022 / 06:44 PM IST
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Religare IPO report on Life Insurance Corporation of India

Insurance behemoth enters Dalal Street: The most awaited IPO is finally here where India’s largest Insurance company Life Insurance Corporation (LIC) look to raise ~Rs. 20,557 cr through offer for sale route at a price band of Rs. 902-949 per share. It has offered a discount of Rs. 45 for retail shareholders & employees and a discount of Rs. 60 for policyholders. Unmatched leadership in insurance industry: LIC is the largest life insurer in India with market share of 61.4% in terms of new business premium (NBP). This is ~1.59x of the total private life insurance sector and ~6.7x the NBP for the second-largest player in the industry. It is the largest Asset manager in India with an AUM of Rs. 40.1 trillion which is 1.1x more than the AUM of the Indian mutual fund industry. Trusted Brand & Unparalleled agency force: The trust in the brand ‘LIC’ is evidenced by the 27.91 cr in force policies under individual business being serviced in India. LIC enjoys unparalleled agency force with 1.33 mn individual agents which sources ~96.2% of its NBP.

Valuation and Outlook

At upper price band, LIC is valued at 1.1x Price to Embedded value implying a post issue market cap of Rs. 6 Lakh cr. When compared to listed peers like HDFC Life (4x P/EV), SBI Life (3x P/EV), and ICICI Prudential Life (2.5x P/EV) the valuations of LIC seems reasonable given that it is the largest player in the industry and has strong and sticky customer base.

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