Life Insurance Corporation of india Corporation has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 64.1% market share in terms of premiums a 66.2% market share in terms of New Business Premium. The company offers participating insurance products and non-participating products i.e. unit linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products. Company was formed by merging and nationalizing 245 private life insurance companies in India on September 1, 1956, with an initial capital of Rs 50 million. From its incorporation until 2000, they were the only life insurer in India. They were identified by IRDA as a Domestic Systemically Important Insurer ('D-SII') on the basis of size, market importance and domestic and global interconnectedness in September 2020. Company's individual products comprise (i) participating insurance products and (ii) non-participating products, which include (a) savings insurance products; (b) term insurance products; (c) health insurance products; (d) annuity and pension products; and (e) unit linked insurance products. The individual products include specially designed products for specific segments, such as special products for women and children and Micro Insurance products. In addition, they offer riders that provide additional benefits along with the base product to cover for additional risks, such as accidental disability, death, critical illness and premium waiver on the death of the proposer. As at September 30, 2021, the individual product portfolio in India comprised 32 individual products (17 participating products and 15 non-participating products) and seven individual riders. Company group products comprise (i) group term insurance products, (ii) group savings insurance products; (iii) group savings pension products; and (iv) group annuity products. As per financial performance, LIC has posted total income/net profits of Rs 2,644.99 Cr / Rs 2,627.37 Cr (FY19), Rs 2,730.95 Cr / Rs 2,710.47 Cr (FY20), Rs. 2,985.57 Cr / Rs 2,974.14 Cr (FY21) and Rs. 1,757.35 Cr / Rs 1,715.31 Cr (Q3 FY22). So company has posted good result over last couple of years. They have posted an average EPS of Rs. 4.47 and average RoNW of 182.25% for last three fiscals. Issue is priced at a P/BV of 72.94 as per NAV of 13.01 as on 31.12.21. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 202 and as per FY22 annualised earnings P/E is around 262, which looks fully priced. As per RHP, comparison between listed players is shown in above table. The Corporation has a widespread presence across India and has a presence in Fiji, Mauritius and the United Kingdom through a branch in each of those countries. As at December 31, 2021, the Corporation had 4,983 offices spread across all 36 states and union territories of India. As per financial performance,LIC has posted total income/net profits of Rs 2,644.99 Cr / Rs 2,627.37 Cr (FY19), Rs 2,730.95 Cr / Rs 2,710.47 Cr (FY20), Rs.2,985.57 Cr / Rs 2,974.14 Cr (FY21) Rs. 1,519.72 Cr / Rs 1,504.01 Cr (H1 FY22). So company has posted good results over last couple of years. They have posted an average EPS of Rs. [ . ] and average RoNW of [ . ]% for last three fiscals. Issue is priced at a P/BV of [ . ] as per NAV of [ . ] on 30.09.21. The only concern is high amount of debt, which will be reduced post IPO. If we attribute latest earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around [ . ] and as per FY22 annualised earnings P/E is around [ . ], which looks fully priced. As per RHP, comparison between listed players is shown in above table. On BRLM's front, 10 lead managers are associated with this IPO, and have handled around 180 IPOs in last three fiscals. From last 10 IPOs, 3 opened below issue price and remaining are opened above issue on the day of listing. As of now, two are trading below issue price and other are trading above issue price. ( As on 27.04.22) As per financials, LIC has shown good results, RoNW is 45.65% and P/E is respectively 202 and 262 as per FY21 and annualised FY22 earnings, which looks fairly priced. Company is leader in life insurance sector and created good brand visibility. We expect company will able to show good growth. Performance of BRLMs are good. So, we give SUBSCRIBE rating for this IPO with limited listing gains and one may hold it for long term in portfolio.
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