India’s largest insurer and largest domestic financial investor Life Insurance Corporation of India (LIC), while unveiling its first post-listing profit, announced a dividend of Rs 1.50 per share with a par value of Rs 10 each, which is subject to subject to shareholder approval at its forthcoming Annual General Meeting (AGM). The company has now set the record date for its first dividend payment. The record date for dividend payment will be Aug. 26, 2022, LIC said in an exchange filing. In addition, the company’s first annual general meeting will be held on September 27, 2022. LIC went public in May.
The company has set the record date for the said dividend. “Recording date for dividend payment is August 26, 2022,” LIC said in a grant application on Monday. Listed on the stock exchanges in May, LIC will hold its first annual general meeting on September 27, 2022, according to the stock exchange filing.
In addition, the board of the insurer gave its approval on Monday to invest Rs 80.67 crore in the proposed rights offering of its joint venture LIC (Nepal) Ltd.
In another filing, LIC said that the Central Government has nominated Suchindra Mishra, Additional Secretary of the Ministry of Financial Services, as Director of Government to replace Pankaj Jain with immediate effect.
LIC reported a 17 percent drop in consolidated net profit to Rs 2,409 crore for the fourth quarter from Rs 2,917 crore in the same quarter a year ago as it shared its first post listing earnings. The insurer’s total income rose to Rs 2,12,230 crore, from Rs 1,90,098 crore in the same period of the previous fiscal year.
The state insurer made its debut on the stock exchanges on May 17, 2022 at a discounted price. LIC shares were allotted to the investors for Rs 949 each. The stock is now about 34 percent below its IPO offering price of Rs 949.
The brokerage firm Motilal Oswal gave the insurance giant a ‘Buy’ rating. It said it thinks the valuation at 0.7 times FY24E EV is reasonable. “LIC’s valuation at 0.7x FY24E EV seems reasonable given the gradual recovery in margins and diversification in the business mix, although the high sensitivity to stock market volatility remains an overhang,” the note said. The brokerage has launched cover on LIC shares with a ‘Buy’ rating and a target price of Rs 830 each.
Motilal Oswal estimates that LIC will deliver approximately 10 percent CAGR in NBP during FY22-24E, while VNB (Value of New Business) margin is likely to improve to 13.6 percent due to better product mix and higher earnings retention. However, it estimates that LIC’s operating RoEV will remain modest at about 9.7 percent at a lower margin profile than private counterparts.
The main downside risks, according to the brokerage, include a slow rise in individual protection and non-par savings, low share and low productivity of the banca channel and a sharp correction in equity markets.
“LIC has a high market share in the Annuity segment (77 percent in FY21) thanks to its strong positioning in the group activities. Annuity’s share of the total new business mix was 21 percent in FY21. The annuity has enabled LIC to report a high VNB margin of 118 percent in the Non-PAR segment and has huge growth potential. However, private players are also catching up quickly as they have reported 23-131 percent CAGR over the past three years (FY19-22),” the note said.
Motilal Oswal believed that while the focus on profitable growth will force LIC to reassess its growth trajectory, maneuvering such a large franchise will be a challenging task and will require superior execution in years to come.
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