Kotak Institutional Equities has initiated a buy rating on Life Insurance Corporation of India (LIC India) with a target price of Rs 1,000, a potential 40 percent upside from current levels as it believes that the current valuations largely ignore its inherent strengths.
The brokerage firm believes that LIC India’s dominance is unparalleled with a 37 percent APE market share in FY22. In fact company's high productivity versus its peers remains the bedrock for LIC India’s market dominance as well as cost leadership.
The gradual shift in product mix should boost the value of new business (VNB) growth going forward despite moderate APE.
In fact, the account bifurcation has led to an increase in the embedded value and earnings despite a lower return on an embedded value that looks a little depressed.
The stock is currently trading at Rs 722.50 and was up 5.23 percent in the last week and 10.73 percent in the past month.
LIC listed at Rs 865/share, a 9 percent discount on its IPO price. Since then, it has been a ride that has kept investors on the edge of their seats. The stock hit its high on the listing day itself which was Rs 919/share and since then, it just refused to look north. The price slid all the way to Rs 588/share which was on October 21.
The slide between Rs 919 to Rs 588 took place in about 5 months and entailed a loss of Rs 2.1 lakh crore in market cap for LIC.
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First Published: Jan 3, 2023 12:18 PM IST
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