Objects of the issue:
- To carry out an offer for sale of 221,374,920 shares by selling shareholders.
- To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
Investment Rationale:
LIC has the leading market position in the sector with the strong rebound of business traction in an underpenetrated market with improving the financialization of savings. LIC’s massive scale of operations and concomitant operating leverage, cost efficiencies, and stellar track record it has established over the decades have allowed it to emerge as a market leader and sustain its position despite the liberalization of the last 20 years. In addition, the management also has plans to improve its VNB margins in the future through a focus on the sale of Non-Participating and group products. At the upper hand of the price band, the IPO is valued at 1.1 P/EV, which is attractive as it is much lower than the listed private life insurance companies that trade at P/EV of 2.5-3.9x. Hence, we recommend a “SUBSCRIBE” rating on this issue for the long term.
