LIC IPO: Demographic blows to fuel life insurance industry

New Delhi, May 3 (IANS) The demographical tailwinds with a moderate penetration of life insurance in India and a massive protection gap will fuel the Indian life insurance coverage industry’s multi-decadal growth, says financial advisory firm Samco Securities.

LIC, being the market leader, both regarding GWP and NBP, is poised to benefit from this growth opportunity, according to the firm.

“While the fact that LIC has been losing market share together with its lower than industry VNB margins do instill apprehension, LIC has got indicated its plans to increase the two,” it said.

The insurance behemoth aims to protect its market share through increased attention to bancassurance and boosting direct sales of its products on its website.

“Further, by increasing its share of non-participating products and protection plans, it aspires to boost its margins. The long term direction of LIC’s business and financial performance does hinge on good execution of the plans.”

From a valuation standpoint, at the upper band of the issue price, LIC is valued at 1.1x embedded value, which reaches a significant discount to peers.

Given the attractive valuation, the downside from here seems limited.


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