LIC’s stock today gained about 2 percent to reach Rs 707. On Monday it closed at Rs 692. The stock has gained 8 per cent from the all-time low of Rs 650.
LIC Stock Price: The shares of insurance company LIC are seeing good growth today. The stock today gained about 2 percent to reach Rs 707. Whereas on Monday it closed at Rs 692. The stock has gained 8 per cent from its all-time low of Rs 650. Brokerage house Motilal Oswal has initiated coverage on the stock and has given Nivea advice. The brokerage believes that LIC is the market leader in the insurance sector and has huge growth potential. The company has a strong distribution network and maintains the trust of the customers. At present, the stock can show an upside of 22 percent from its current price.
Target price Rs 830
Brokerage house Motilal Oswal says that LIC has maintained its market leadership in the life insurance industry. In this, despite the strong brand of LIC, large distribution network and the presence of private players, the trust of the customers is a big reason. Unlike private companies, LIC relies on its principal agency channel (1.3 million agents, 54% of the industry as on 31 March 2022) for distribution of insurance products. Nevertheless, the company has maintained a firm control over the cast ratio.
The brokerage estimates that during LIC FY22-24E there will be 10 percent CAGR growth in NBP. Whereas on improving product mix and higher profit retention, the value of New Business (VNB) margin is expected to improve by 13.6 per cent. The brokerage has given a BUY rating on the stock based on 0.8x FY24E EV and has set a target price of Rs 830.
LIC’s focus on profitable growth
LIC’s focus is on profitable growth. The brokerage estimates that the company may report 10%/8% CAGR growth in NBP/APE during FY22-24E. The brokerage says that LIC has a strong agency channel and the number of agents is 1.3 million, which is 54 percent of the industry. Productivity of this channel remains NBP 413000 per agent per agent in FY 2021. Even in terms of number of policies, LIC agents sold an average of 15.6 policies during FY 2022, compared to 1.9 for the top 5 private players.
Still 27% weaker than IPO price
LIC’s stock still looks 27 percent weaker than its IPO price. The IPO price was Rs 949. This stock has never been able to touch the IPO price since its listing. Rs 919 is the 1-year high for the stock, while Rs 650 is the low level so far.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
