Moneycontrol Pro Panorama | What is really ailing LIC?

Dear Reader,

Tata Motors is leading the gains among Nifty 50 stocks on Tuesday afternoon. The company has several things going for it. Its new strategy in the domestic passenger vehicle business and recalibration of costs at Jaguar Land Rover (JLR) are yielding results.

In India, Tata Motors has strengthened its presence in the fast-growing utility vehicle segment and is gaining market share. It is scaling up investments in electric vehicles. JLR has lowered the break-even levels and is seeing good demand for its vehicles even though semiconductor shortages continue to constrain production. As today’s piece explains, Tata Motors’ aggressive push in refreshing the product portfolio and market strategy places it in a good position to ride the upcycle in commercial vehicles.

Specifically, Tata Motors’ renewed approach to commercial vehicles has helped it claw back the market share it had ceded to Leyland and Eicher in the medium and heavy commercial vehicles, writes Vatsala Kamat. That is a remarkable turn of events at Tata Motors, given the disparate business units it represents.

Though not strictly comparable, Life Insurance Corporation of India (LIC) can take inspiration from Tata Motors’ strategy rejig. The company has been trailing its private peers in premium revenues and the latest data show continuing underperformance.

Retail annualised premium equivalent or the normalised revenues in the individual business declined 2 percent in October compared to a healthy 21-33 percent rise at HDFC Life, ICICI Prudential Life and SBI Life Insurance. LIC is trailing the private sector peers by a wide margin on a two-year compound annual growth rate (to exclude COVID-19 impact) and fiscal year to date basis as well.

The problem, as Emkay Global Financial Services explains, is the slow pace of change in the way LIC conducts business. “LIC, for decades, has primarily relied on agents-driven distribution to sell its traditional savings-heavy products. With the bank channel increasingly becoming important for savings product distribution and digital channels becoming important for retail protection, LIC seems to be losing the plot,” analysts at Emkay said in a note.

That is not a pretty picture to present for an IPO-bound company. Meanwhile, Sapphire Foods’ public issue opens for subscription today. Unlike the cautious take on the Paytm IPO, our research team has a more favourable view on Sapphire Foods. You can find out the reasons here.

More investing insights from our research team:

IndusInd Bank – What next after the big fall?

A decent show by Eicher Motors, a ride for the long term

SunTV: Slow growth, missing OTT strategy underline flat quarter

Radico Khaitan – Solid Q2 overshadowed by inflationary pressures

What else are we reading?

Economic Recovery Tracker | A stellar showing for Diwali

The Green Pivot | Inox Wind’s investors are ignoring project execution risks

Why the government is wrong in asking ONGC to cede Mumbai High's oil fields

Crypto Conversations: Is this the best time to sell SHIB and get into crypto gaming?

Stay or sell? The $110tn investment industry gets tougher on climate (republished from the FT)

Picks from our technical analysts: IEX, Kotak Bank, Bata India and M&M (These are published every trading day before markets open)

R Sree Ram

Moneycontrol Pro