Life insurance corporation of India (NSE: LICI) stock at press time was trading at $6.28, and the share previous close on May 11 2023, at $6.82 and opened at $6.82.
The NSE forecast for the day says it would open flat and might go into negative, which means that the bears will be active in the market. The benchmark S&P BSE SENSEX hopped by 0.2% to $754.68. LIC acted as a crown of the life insurance corporation sector. Currently, the market cap of a life insurance corporation company is $464 Billion.
Interestingly, in the last 30 days, the company stock has increased by 2.3%. As of March 2023, a 96.50% stake in a Life insurance corporation is held by company promoters. Also, no shares have been pledged.
Life Insurance Corporation of India Share Recommendations
On April 6 2023, BOB Capital Markets Ltd placed the target at $9.73 with a 42.84% upside. They considered the LTP of 560.55, and the Price to Reco was 550.55 with a change of 1.73%. The rating given for Life insurance corporation of India stock was Buy.
LIC IPO and After Effects
The Life insurance corporation of India released its IPO in 2022 with a face value of $0.12 and approximately 16.20 Cr shares. The IPO opened on May 4, 2022, and closed on May 9, 2022. Even though the public offering was much awaited, the stock is currently down by around 39% since the launch. The 52-week high has been $11.18, and the lowest share price was reported to be $6.45.
Previous earnings were released on February 9, 2023, where the estimated revenue was $18 Billion, but it was reported to be $13 Billion. This came with a surprise of negative $5.13 Billion and a drop of 27.30%. The subsequent earnings will be noted on May 31, 2023, with an estimated revue of $15.947 Billion.
Financial Analysis of the Life Insurance Corporation
Concerning December 2022, the Year-over-Year (YoY) changes for Operating Expenses were reported to have dropped by 13.16% to $889 Million. Net Income gained 1,828.38% to $1.95 Billion.
With a revenue of $97.31 Billion, income per share was found to be $15.391, and gross profit was 4.57
Holders Details at the Life Insurance Corporation of India
As per the data, 96.50% of the shares are held by insiders and 0.68% by Institutions. Also, 19.35% of Floats are held by institutions, and 38 Institutions have these shares.
The PE and PB ratio Diversification & more
The PE ratio was 14.07, while 31.29% of the Pb ratio was reported.
The net profit for the insurance company between Q3 and Q4 2022 jumped 27 times to $770 Million. This value is enormous compared to a net profit of $28 Million just a year ago.
Life insurance corporation of India (NSE: LICI) – Candle Exploration
Interestingly, the 52-week high was recorded on May 17, 2022, during the IPO, and since then, the share price dropped considerably. Also, the 52-week low was in April.
The support for the share price coincides with the yearly low of the life insurance corporation of India. The current lic share price is close to the license, a downward-slopping EMA gives a bullish indication, but MACD provides positivity.
If the subsequent earnings come out positive, the share price could reach R1, present at $7.09, and if possible, shall try to cross R2 at $7.58, which is close to the EMA.
What Do Indicators Say?
The Trendline with breaks suggests that the stock price could rally if it crosses the bullish trend line or would have a downfall if it crosses the bearish trendline. Also, they could meet at $6.88 a few days after the earnings are announced. It could be a valuable factor in deciding the future move.
Life insurance corporation of- BSE
In the BSE stock exchange, the share price drop since the IPO was reported to be around 39.72%. The support is at an all-time low of $6.44, and the current share price of the life insurance corporation of hovers slightly above it. If the subsequent earnings come out positive, the share price could try to cross R1 present at the ₹625.15 and move towards R2 present at ₹678.20.
A bad earnings report should not make the share price go below support, but if it happens, the price could move further south.
The dividend yield for India’s insurance corporation was 0.27%, and an ROE was 45.27%.
About Life Insurance Corporation of India
Life insurance corporation of India provides life insurance products in India, Mauritius, Fiji, and the United Kingdom. The company offers various financial services like insurance and investment products, including investment, annuity, protection, pension, savings, health, retirement, unit-linked insurance, variable capital redemption and certain annuity products.
They also offer group products, like group term insurance, group savings insurance, group savings pension, and group annuity products. Also, it facilitates micro-insurance products and riders like critical illness, term insurance, premium waiver benefits and accident benefit.
It also includes accidental death and disability benefits. The life insurance corporation of India is based in Mumbai, India; the business has been operating since September 1, 1956. It is owned by the Government of India under Finance Ministry and was conceived by the Life Insurance of India Act 1956 by the Indian Parliament.
It was formed by an amalgamation of 245 insurance companies and provident fund organizations running before 1947.
LIC Mutual Fund
The company facilities exposure to mutual funds by providing the following products. LIC MF Large & Midcap Funds, with first tier benchmark of Nifty LargeMidCap 250 TRI, are considered a high-risk product. LIC MF Tax Plan, with a benchmark of Nifty 500 TRI, is also believed to be high risk.
What are Mutual Funds
A mutual fund is a pool of money managed by a professional Fund Manager. It is a type of trust in which the money is collected in the collection from multiple investors with common investment objectives.
The funds collected are invested in the same equities, bonds, money market instruments and securities.
The Failed IPO
During the much-awaited and publicized initial public offering in May 2022. The face value was kept between $10.97 to $11.54 per share, eventually reaching the final value of $0.12. It was then assumed that the stock’s market price for LIC employees would be $10.97, and policyholders would get them at $10.81. Also, the investors would have to pay $11.54.
Why did the IPO Fail
The Government of India managed a total revenue of $2.7 Billion in the IPO of LIC shares to new shareholders and Millions of Indian families holding the LIC policies. The reason cited was that the offer was oversubscribed by over three times.
The policyholders placed bids over six times; the LIC employees received orders for a multiple of four times the shares that were reserved with them.
Problems LIC could face after the Failed IPO
The insurance company is already facing an uphill task after the lacklustre IPO and heavy competition from the market. Following are some problems the company has to face.
Increasing non-participating Policy Business – Bad for the company
A participant or a policyholder
LIC’s non-participating products include savings insurance and term insurance products, health insurance policies and annuity and pension products.
Typically, in a non-participating policy, a policyholder does not participate in the profits of the life insurance provider and policy premiums are usually priced lower than those for participating policies.
The Life insurance corporation of India and Controversies
In 2022, short-seller Hinderburg released a detailed report regarding Indian conglomerate Adani Group, causing its stocks to tank. A PIL was filed in the Supreme Court of India on the Adani-Hindenburg controversy.
The plaintiff wants to investigate the State Bank of India (SBI), a Life insurance corporation (LIC), regarding investing public money into Adani Group without due diligence.
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Source: https://www.thecoinrepublic.com/2023/05/12/life-insurance-corporation-of-india-fighting-the-competition/