Brokerage firms have been bullish on LIC IPO with most advising investors to subscribe to the issue. Analysts have highlighted that LIC has been priced attractively. “At the upper-priced band of Rs 949, the issue is valued at 1.1x EV (Sep ’21) which is at a significant discount to private sector valuations,” Nirmal Bang said in a report. Geojit Financial Services said that SBI Life Insurance Company trades at a P/EVPS of 3.2x while HDFC Life Insurance Company is at 3.9x and ICICI Prudential Life Insurance Company is at 2.5x.
Currently, LIC has a 61.5% in terms of New Business Premium (or NBP), a 71.8% market share in terms of number of individual policies issued, an 88.8% market share in terms of the number of group policies issued for the nine months ended December 31, 2021. “Even though headwinds like declining market share, lower short-term persistency ratios and sub-par margins demand a discount to private players, the current valuation is attractive considering its strong market presence, improvement in profitability due to changes in surplus distribution norms and strong sector growth outlook,” analysts at Geojit Financial Services wrote in the IPO note.
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