Buy this recently listed major insurance stock for strong potential gains of 20%: Geojit

Stock market outlook

On NSE, the current market price (CMP) of LIC is Rs 678.85 each. The stock’s 52-week low is Rs 650 each recorded in June 2022, and the 52-week high is Rs 918.95 each recorded in May 2022.

Returns on investment

Returns on investment

The stock was listed on May 17, 2022. The stock over the week fell around 1.04%. Over the past month, it has gained around 0.52%. While in the last 3 months it has dropped by 16.36%, respectively. The stock has returned negative 22.44% since its IPO.

    PAT multiplies as growth rebounds on an annual basis

PAT multiplies as growth rebounds on an annual basis

In the first quarter of FY23, LIC’s Gross Premium Income (GPI) increased by 19.9% ​​YoY to Rs. 98,941cr, mainly driven by strong first year premium growth (+ 45.8% YoY to Rs. 7,476cr), Single Premium (+32.5% to Rs. 40,935cr) and Renewal Premium (+8.8% YoY to Rs. 50,530cr ). Incurred claims increased by 5.7% year-on-year to Rs. 69,134 cr, although the claims settlement ratio decreased by 206 bps to 91.51%. The annualized premium equivalent (APE) product range was 57.9%, 4.9% and 37.2% for individual participating, individual non-participating and group policies, respectively. The company’s reported PAT for the quarter jumped to Rs. 603cr (from Rs. 24cr in Q1FY22), benefiting in part from a higher contribution from the shareholders’ account due to changes in the surplus distribution policy.

Highlights

Highlights

  • The company’s Gross New Business (GNB) value during the quarter stood at Rs. 1,861cr, while the GNB margin decreased to 13.6% (from 15.1% at the end of the financial year). 22) due to increased annuities and changes in product mix.
  • The solvency ratio improved slightly to 188% (vs. 185% as of March 31, 2022).
  • Branch hiring is expected to pick up, with the total number of agents increasing 0.5% quarter-on-quarter to 13,32,782.
    New product launches and digitization to drive growth

New product launches and digitization to drive growth

LIC’s AUM increased by 7.6% sequentially to Rs. 41.02 lakh crore (from 38.13 lakh crore). The company has launched two new products – Dhan Sanchay and Bima Ratna, the latter being a channel specific product only for bancassurance. The company has also partnered with Policy Bazaar and recently launched a soft launch on its website, aiming to promote font sales through online channels. The company’s Ananda app, launched during COVID-19 to help agents conduct business without face-to-face interactions, is now integrated with WhatsApp and has cut policy wrap-up time to less than 8 minutes.

Initiate coverage on insurance giant, buy for target price of Rs 810

Initiate coverage on insurance giant, buy for target price of Rs 810

LIC saw its market shares recover during the past quarter and will maintain its dominant position in the field of life insurance for a very long time. The good will of the general public, the support of the government and the solid investment portfolio remain favorable factors and guarantee that the company will continue to perform well in the long term. While we may see a marginal slowdown in new business margin growth in the near term, the company’s focus on increasing the contribution of high-margin VNB products bodes well for its performance at long term. With a bullish outlook, we assign a BUY rating to the stock with a target price of Rs. 810, based on 0.8x FY24E EV per share.

About - Life Insurance Company of India

About – Life Insurance Company of India

Founded and majority owned by the Government of India, Life Insurance of Corporation of India Limited is the country’s leading statutory insurance and investment company, with assets under management (AUM) of over Rs. 41 lakh crore and investments in more than 280 listed companies. It started its operations as a company in September 1956 after the Indian Life Insurance Act was passed by the Indian Parliament in June 1956. It is one of the largest financial institutions in India . It has an asset value of over 2,529,390 crores. The headquarters of LIC is in Mumbai, Maharashtra.

Disclaimer

Disclaimer

The stock was picked up in Geojit’s brokerage report. Greynium Information Technologies, the author and the respective brokerage are not responsible for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.

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