The brokerage house has retained its investment opinion on LIC’s stock. The brokerage believes that LIC is the market leader in the insurance sector and has huge growth potential.
LIC Stock Price: Insurance company LIC has given big news to its shareholders. There has been a significant increase in the Embedded Value of the company. The Embedded Value of the company stood at Rs 5,41,492 crore as on March 31, 2022, from Rs 95,605 crore as on March 31, 2021. After this, today the stock has seen a rise during the early trading. Anyway, there is a recovery in the stock for the last few days and it has become 10 percent stronger from its record low. Brokerage house Motilal Oswal has maintained its investment opinion on the stock. The brokerage believes that LIC is the market leader in the insurance sector and has huge growth potential. It will maintain its leadership position.
LIC: Strong position in the industry
Brokerage house Motilal Oswal says that LIC is in a strong position to maintain its market leadership position in the insurance industry. At the same time, the company is also in the market leading position in the high profit product segment (mainly protection and non-PAR savings / annuity) and this position is going to continue. The brokerage house estimates that LIC’s growth in NBP for FY22-24 may be 10 percent CAGR. At the same time, the company’s margins are also expected to improve during this period. Once the capital market is stable, the company EV will see even better growth. LIC is currently at a valuation of 0.7x FY24E EV which looks reasonable. The brokerage has given a target of Rs 830 while advising investment in the stock.
Huge increase in embedded value
The Embedded Value (IEV) of LIC has increased tremendously. The Embedded Value of the company has been estimated at Rs 5,41,492 crore as on March 31, 2022. The embedded value of LIC as on March 31, 2021 was Rs 95,605 crore. Whereas on September 30, 2021, the embedded value was estimated at Rs 5,39,686 crore. The Embedded Value as on 30th September, 2021 was significantly higher as compared to March 2021 due to the divestment of funds by the company after changes in LIC Act during FY 2021-22.
Embedded value is a measure of the value of an insurance company. It is used by insurance companies to calculate the consolidated value of the interests of the shareholders in the insurance business. It represents the interests of the shareholders in the income from the allocated assets, in addition to the funds reserved for the total risk.
Still 25% weaker than IPO price
LIC’s stock still looks 25 per cent 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. Right now it is showing at Rs 715.
(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.)