The Indian Life Insurance Company (NSE:LICI) stock at press time was trading at $6.28, and the previous stock closed May 11, 2023, at $6.82 and opened at 6. $.82.
The NSE forecast for the day indicates that it would open flat and could turn negative, meaning the bears will be active in the market. The benchmark S&P BSE SENDEX jumped 0.2% to $754.68. LIC acted as the crown of the life insurance company industry. Currently, the market capitalization of a life insurance company is $464 billion.
Interestingly, over the past 30 days, the company’s shares have risen 2.3%. As of March 2023, a 96.50% stake in a life insurance company is held by business sponsors. In addition, no shares have been pledged.
Life Insurance Corporation of India Stock Recommendations
On April 6, 2023, BOB Capital Markets Ltd placed the target at $9.73 with a rise of 42.84%. They considered the LTP to be 560.55, and the Price to Reco was 550.55 with a change of 1.73%. The rating assigned to the shares of the Indian life insurance company was Buy.
IPO of LIC and After Effects
The Indian life insurance company issued its IPO in 2022 with a par value of $0.12 and around 16.20 Cr shares. The IPO opened on May 4, 2022 and closed on May 9, 2022. Even though the public offering was highly anticipated, the stock is currently down around 39% since launch. The 52-week high was $11.18 and the lowest stock price would be $6.45.
Earlier earnings were released on February 9, 2023, where estimated earnings were $18 billion, but would have been $13 billion. This was accompanied by a negative surprise of $5.13 billion and a decline of 27.30%. Subsequent earnings will be noted on May 31, 2023, with an estimated review of $15.947 billion.
Life Insurance Company Financial Analysis
Regarding December 2022, the year-over-year (YoY) changes for operating expenses would have fallen by 13.16% to $889 million. Net profit rose 1,828.38% to $1.95 billion.
With revenue of $97.31 billion, earnings per share turned out to be $15.391 and gross profit was $4.57.
Details of Holders at Life Insurance Corporation of India
According to the data, 96.50% of the shares are held by insiders and 0.68% by institutions. Also, 19.35% of Floating is held by institutions, and 38 Institutions hold 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 insurance company’s net profit between the third and fourth quarters of 2022 jumped 27 times to $770 million. That value is huge compared to a net profit of $28 million just a year ago.
Life Insurance Company of India (NSE: LICI) – Candle Exploration
Interestingly, the 52-week high was recorded on May 17, 2022, during the IPO, and since then the stock price has fallen significantly. Additionally, the 52-week low was in April.
The share price support coincides with the yearly low of the Indian life insurance company. The current lic stock price is close to the license, a downward sloping EMA gives a bullish indication, but MACD provides positivity.
If subsequent earnings are positive, the stock price could reach R1, present at $7.09, and if possible, will attempt to break through R2 at $7.58, which is close to the EMA.
What do the indicators say?
The trendline with breakouts suggests that the stock price could rally if it crosses the uptrend line or fall if it crosses the downtrend line. Moreover, they could meet at $6.88 a few days after the earnings announcement. This could be a valuable factor in deciding the future move.
BSE Life Insurance Company
On the BSE stock exchange, the decline in the share price since the IPO would be around 39.72%. Support is at an all-time low of $6.44, and the life insurance company’s current stock price sits slightly above. If subsequent earnings are positive, the stock price might attempt to break through R1 present at ₹625.15 and head towards R2 present at ₹678.20.
A poor earnings report should not send the stock price below support, but if it does, the price could move further south.
The Indian insurance company’s dividend yield was 0.27% and the ROE was 45.27%.
About Life Insurance Corporation of India
Life Insurance Corporation of India offers life insurance products in India, Mauritius, Fiji and United Kingdom. The Company offers various financial services such as insurance and investment products, including investment, annuity, protection, retirement, savings, health, retirement, unit insurance account, variable capital redemption and certain annuity products.
They also offer group products, such as group term insurance, group savings insurance, group savings pension and group annuity products. Additionally, it facilitates microinsurance products and riders such as critical illness, term insurance, premium waiver benefits, and accident benefits.
It also includes accidental death and disability benefits. Life Insurance Company of India is based in Mumbai, India; the company has been in operation since September 1, 1956. It is owned by the Government of India under the Ministry of Finance and was devised by the Life Insurance Act of India 1956 by the Parliament of India.
It was formed by amalgamation of 245 insurance companies and provident fund organizations operating before 1947.
LIC Mutual Fund
The company facilitates exposure to mutual funds by offering the following products. LIC MF Large & Midcap funds, with a top tier benchmark Nifty LargeMidCap 250 TRI, are considered a high risk product. The LIC MF tax plan, with a benchmark of Nifty 500 TRI, is also considered 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 money is raised when collecting from several investors with common investment objectives.
The funds raised are invested in the same stocks, bonds, money market instruments and transferable securities.
The failed IPO
In the highly anticipated and high profile May 2022 IPO. Par value was held between $10.97 and $11.54 per share, eventually reaching the final value of $0.12. It was then assumed that the market price of the shares for LIC employees would be $10.97 and policyholders would get them at $10.81. Additionally, investors would have to pay $11.54.
Why the IPO Failed
The Indian government managed a total revenue of $2.7 billion in the IPO of LIC shares from new shareholders and millions of Indian families holding LIC policies. The reason given was that the offer had been oversubscribed more than three times.
Policyholders made offers more than six times; LIC employees received orders for a multiple of four times the shares reserved for them.
Problems LIC Might Face After Failed IPO
The insurance company is already facing a daunting task after the lackluster IPO and strong market competition. Here are some issues that the company has to deal with.
Increase in non-participating policy business – Bad for business
A participant or a policyholder
LIC’s non-participating products include savings and term insurance products, health insurance policies, and annuity and retirement products.
Typically, in a non-participating policy, a policyholder does not participate in the profits of the life insurance provider, and the premiums for the policy are usually less expensive than those for participating policies.
India’s life insurance company and controversies
In 2022, short seller Hinderburg released a detailed report regarding Indian conglomerate Adani Group, causing its stocks to plummet. A PIL has been filed in the Supreme Court of India over the Adani-Hindenburg controversy.
The plaintiff wishes to investigate the State Bank of India (SBI), a Life Assurance Company (LIC), regarding the investment of public funds in the Adani Group without due diligence.