Equity Research Report - Life Insurance Corporation of India Limited

Summary

LIC is the 3rd strongest global insurance brand, with ~28.07 crore policies being serviced and ~13.33 lakh agents.

Company Overview:

• Life Insurance Corporation of India offers life insurance products in India, Fiji, Mauritius, and the UK.
• It provides individual projects, which includes collaborating coverage products; and non-participating products comprising savings coverage, term coverage, health insurance, annuity and pension, and unit-linked insurance merchandise; special merchandise for women and children, micro coverage merchandise; and riders, an add-on covers to the base policy to facilitate additional advantages linked to the accident, vital infection, and demise and premium waiver advantage.
• The organization additionally provides group products, including group term coverage, group savings coverage, group savings pension, and group annuity products.
• Life Insurance Corporation of India was established in 1956 and is primarily based in Mumbai, India.

Key Statistics:

Market Cap: Rs. 406602 Cr.

Current Price: Rs. 642.9/-

52W High: Rs. 919/-

Stock P/E: 135.0

Book Value: Rs. 50.7/-

Dividend Yield: 0.23%

P/B: 12.7

Face Value: Rs.10/-

52W Low: Rs. 641.9/-

Source: www.sharescart.com 

Shareholding Pattern (%):

Source: www.sharescart.com

Break up of Business: % Share to Total NB Premium:

Source: Company's Corporate Presentation

Peer Comparison:

Source: www.sharescart.com 

Growth Drivers:

• LIC has the highest gap in market share2 relative to the 2nd largest life insurer in the Indian market, as compared to market leaders in the top 7 markets globally.
• 10th Largest life insurer globally by total assets.
• Fifth largest life insurer globally by GWP and the largest player in the fast growing & underpenetrated Indian life insurance sector.
• Trusted brand and a customer centric business model.
• Cross-cyclical product mix that caters to diverse consumer needs and an individual product portfolio that is dominated by participating life insurance policies.
• Presence across India through an omni-channel distribution network with an unparalleled agency force.
• Harnessing technology capabilities to support customer connect and drive operating efficiencies.
• Largest asset manager in India1with an established track record of financial performance & profitable growth.
• Robust risk management framework, and recognized as a Domestic Systemically Important Insurer (D-SII).
• Spearheaded by a highly experienced and qualified management team, a distinguished Board & strong corporate governance framework.
• 96.03 % of Total employees are deployed at Divisional and Branch Office to look after operational activities.
• Training is imparted to agents by senior officers to ensure quality of training.
• Producing highest number of MDRTs through recruitment of millennial generation & massive training.

Source: Company's Corporate Presentation 

Financial Snapshot :

Balance Sheet (Rs. in Crores):

Profit and Loss Account (Rs. in Crores):

Cash Flow Statement (Rs. in Crores):

Ratio Analysis:

Source: www.sharescart.com 

VALUATIONS:

On the basis of Discount Cash Flow Valuation Method, we

are recommending ‘Buy’ for the stock. Since the stock

offers good opportunity, we initiate a ‘BUY’ signal on the

stock with 12-month price target of Rs 728/- share an

upside of 13.22 % from current levels.