According to the brokerage report, the value of new business of LIC is only 1 percent at present. There has been a pickup in the growth of LIC. Growth is estimated at 6 per cent during FY22-24E.
LIC Stock Latest Price: Shares of insurance company LIC reached its fresh all-time low in early trading today. The shares weakened to Rs 650 today, although some recovery is being seen later. On Friday, the stock closed at a fresh low of Rs 655. LIC’s market cap has cleared nearly 30 percent since its listing on May 17. However, the brokerage house JP Morgan is bullish on the stock. Giving an overweight rating on the stock, the brokerage has given a target of Rs 840. The brokerage says that there is a pickup in the business of the company and further growth is expected.
Shares at 32% discount from IPO price
Today the share of LIC has weakened and has reached a price of Rs 650. The IPO price was Rs 949. In this sense, the stock is currently trading at a discount of 32 per cent as compared to the IPO price. At the time of IPO, the valuation of the company was estimated at 6 lakh crores. Whereas now its market cap has come down to close to 4.15 lakh crores. That is, till now the investors of LIC have got a setback of 1.85 lakh crores. The market cap has cleared more than 30 per cent.
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What to say about the brokerage house
Giving an overweight rating on the stock, brokerage house JP Morgan has given a target of Rs 840. The brokerage house expects strong growth in LIC. The brokerage says that the value of the company’s new business is currently only 1 percent. 99% of the value is of old policies. The brokerage says that the company’s new business has strong growth potential. Recently LIC has achieved a pick-up in growth and during FY22-24E is expected to grow at 6 per cent.
Brokerage says that LIC is the cheapest stock in our insurance sector coverage as compared to its peers. Its valuation is very attractive. It is trading at 0.75x FY23E EV. Private sector insurance companies are at a multiple of 2-3x, but their growth is fast. At present, the discounted valuation of LIC is creating a buying opportunity from here.
Experts are also bullish
Anuj Gupta, VP-Research, IIFl believes that LIC occupies a dominant position in the insurance sector. The company has the largest market share and strong customer base in this sector. In such a situation, there is no concern about its outlook. However, the profitability of the company has been somewhat less as compared to the private companies. But the way in which strong growth is going to come in the insurance sector, LIC will get the benefit of it being on the leading position. He says that long-term investors should stick to it instead of taking any decision in a hurry.
Swastika Investmart Ltd. Head of Research, Santosh Meena also says that one can invest in LIC shares at the current price. Long term investors need not worry. Insurance is a long term business, so the benefits of wealth development and compounding will accrue over time. The fundamentals of LIC are strong, the potential for huge growth in the insurance sector in India is very high.
(Disclaimer: Advice on investing in stocks, brokerage houses and Given by experts. These are not the personal views of The Financial Express. There are risks in the market, so take expert opinion before investing.