Life Insurance Corporation of India, which went public a year ago in May 2023, has fallen below Rs 600 once more. The stock has become the biggest way for buyers to lose money. Its market capitalization has dropped from Rs 6 lakh crore to Rs 3.77 lakh crore, which is more than Rs 2.23 lakh crore.
The Government of India sold its 3.5% stake in LIC, or 22.13 crore equity shares, at Rs 949 each to make a little more than Rs 21,000 crore. This was the biggest IPO in Indian history. The stock has lost more than 37% of its value since it was first sold.
Even though LIC shares have been on Dalal Street for a year, experts still have mixed feelings about them, with most of them being positive. Even though LIC’s market capitalization (mcap) has dropped a lot, there are no “sell” recommendations for it yet.
According to data from Trendlyne, the analysts’ average rating for LIC is “buy.” Twelve of the 15 analysts have a “buy” or “strong buy” rating on the stock, while three have a “hold” rating. The average goal price for the stock is Rs 807. This means that prices could go up by 36% from where they are now.
Kotak Institutional Equities said that LIC’s estimated VNB margin went up to 19.2% in 4QFY23 from 14.6% in 9MFY23, even though APE was down 7% year over year. This was mostly due to trued-up assumptions in the group business. It looks like LIC will have steady growth in VNB. It said that valuations give enough cushion and gave a “buy” grade and a fair value of Rs 1,000.
Based on how sensitive EV is to changes in the market, ICICI Securities has kept its buy rating on LIC and kept its goal price at Rs 917. “We expect APE to grow by 10–12%, the VNB margin to be 17–18%, and unwind to be 9% for FY24 and 25E, respectively,” he said.
According to JM Financial, LIC’s present valuation of 0.5 times FY25E EV is conservative, but the firm believes the stock will rerate as a result of the company’s many positive attributes. These attributes include its big customer base, large agency network, strong brand equity, and most crucially, the sovereign guarantee connected to LIC products. It kept its “buy” rating on the stock and kept its goal price of Rs 940.
Kotak Institutional Equities, ICICI Securities, and JM Financial’s goal prices show that the insurance giant could go up by 55–70% from where it is now. On Thursday, the stock went up just a little bit and stayed around Rs 594.
But not every expert is giving the stock a big thumbs up. A few people have said that investors should be careful with the company because the state-run insurance giant does not have much room to go up.
Less money was set aside for taxes, so the PAT was Rs 36,400 crore, which was 30% more than we thought it would be. EV as of FY23 is Rs 5,82,200 crore, which is a 7.5% increase. This is mostly due to positive operating assumption changes and a smaller effect of negative economic variances. Emkay Global has a “hold” rating on the stock and a revised price goal of Rs 660 per share.
LIC wants to get back some of the market share it lost to private insurers in FY23 by making products that fit the market, depending on its strong distribution network, and making changes to its existing products as needed. With a revised recommendation of “hold” and a target price of Rs 646, Religare Broking stated that it expects growth from non-par and annuity products, which will increase margins while maintaining leadership in par products.