LIC shares Rs 1,000 or Rs 646? In Mcap Rs. 2.23 crore, most think the stock will be worth:
Life Insurance Corporation of India, which went public a year ago in May 2023, has fallen below Rs 600 again. This has become the biggest way for stock buyers to lose money. Its market cap fell from Rs 6 lakh crore to Rs 3.77 lakh crore, which is over Rs 2.23 lakh crore.
The Indian government sold its 3.5% stake in LIC, or 22.13 crore equity shares, at Rs 949 per share, earning over Rs 21,000 crore. It is the largest IPO in Indian history. The stock has lost more than 37% of its value since it was first sold.
Although LIC shares have been trading on Dalal Street for over a year, experts have mixed feelings about them, most of them positive. Although LIC’s market capitalization (MCAP) has fallen sharply, there is no “sell” recommendation for it.
According to Trendline data, the average analyst rating for LIC is “Buy”. Twelve out of 15 analysts have a “buy” or “strong buy” rating on the stock, while three have a “hold” rating. The average target price for the stock is Rs.807. That means the price may increase by up to 36% from where it is now.
Kotak Institutional Equities said LIC’s estimated VNB margin rose to 19.2% in 4QFY23 from 14.6% in 9MFY23, despite a 7% year-on-year decline in APE. This was mostly due to correct assumptions in group business. LIC’s VNB seems to keep growing. Appraisals offer a substantial discount and a “buy” rating and a fair value of Rs 1,000.
ICICI Securities maintains a Buy rating on LIC with a target price of Rs 917 based on EV’s sensitivity to market movements. “We expect APE to grow at 10-12%, VNB margin at 17-18%. %, and is expected to be 9% for FY24 and 25E respectively,” he said.
According to JM Financial, LIC’s current valuation of 0.5 times FY25E EV is conservative, but the company believes the stock will revalue as a result of the company’s many positive attributes. These features include its large customer base, large agency network, strong brand equity and most importantly, the sovereign guarantee attached to LIC products. It maintained “Buy” rating on the stock with a target price of Rs.940.
Target prices by Kotak Institutional Equities, ICICI Securities and JM Financial suggest the insurer could grow 55-70% from where it is now. The stock was marginally higher at Rs 594 on Thursday.
But not every expert gives the stock high praise. Some have said that investors should be wary of the public sector insurer as there is not much room for growth.
Less money was allocated for taxes, so PAT was Rs. 36,400 crore, which is 30% higher than what we expected. EV in FY23 is Rs. 5,82,200 crore, a growth of 7.5%. This is mostly due to positive operating assumption changes and less impact of negative economic variables. MK Global has a “Hold” rating on the stock and a revised price target of Rs 660 per share.
LIC expects to regain some of the market share lost to private insurers in FY13 by developing market-friendly products based on its strong distribution network and adapting existing products to suit demand. With a revised recommendation of “Hold” and a target price of Rs 646, Relicare Broking said it expects growth in non-collateral and annuity products, which will drive margin growth while leading equity products.
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