Life Insurance Corporation of India (LIC) stock has become the cheapest insurance stock in the world, with Varun Dubey, a senior research analyst at G Business, in his report on Tuesday.
Shares of LIC weakened on the BSE and NSE on Tuesday at about 9% discount. They are listed at Rs 867 per share on BSE and Rs 872 per share on NSE, as against the issue price of Rs 949 per share in the above price band.
The market capitalization of LIC’s Indian Embedded Value (M-cap / IEV) is around 1 and 1.05 (in case of 5% correction from issue price) compared to other personal life insurance companies like HDFC Life (4.1 M-Cap). / IEV), SBI Life (2.8M-Cap / IV) and ICICI Pru Life (2.4M-Cap / IV), highlighted by Dubey.
In comparison, LIC’s assessment is one-fourth of HDFC Life’s assessment, the research analyst said.
Evaluation of public insurance is also cheaper than its global counterpart because AXA SA has 1.1-1.2 M-cap / IEV, whereas AIA, Zurich Insurance, and Alliance have M-Cap / IEV between 1.1-1.9.
G Business Managing Editor Anil Singhvi, in his post listing view, reiterated that the Tepid listing was consistent with expectations, and he suggested buying between Rs 1,500 crore and Rs 2,000 crore, which could come from retail and high net investors.
According to Singhvi, listing LIC below the issue price is mainly due to pressure from retail investors, as institutional investors generally have a long-term outlook.
Minutes after the listing, the stock traded up more than 6 percent intra-day on the BSE, at Rs 920 per share. The S&P BSE Sensex is trading at Rs 898.8 per share, up 3.5 per cent at 11:25 AM, compared to a gain of more than 1.29 per cent.
The initial public offering of public insurance, which was open from 4 to 9 May, has been subscribed 2.95 times on the last day. In contrast to the 16,20,78,067 shares offered, the state-run insurance company received bids for 47,83,67,010 shares.