@ K Atari bhai In response to your query , I like to say that investment income of LIC is 2.73 lac crore in the last FY which is about 7.6% earning on investment. If you want to track growth rate , the figure was 1.8 lack cr in 2017 FY. As to profit from sale of equity , it is 29000 cr in the first 6m of this current FY. This figure varies from yr to yr depending on the circumstances. As to dividend income, I have not got any convincing data .As total investment in equity markets is about 9.78 lac cr , you may take in the order of 10000 cr. Thank you
Yes u can apply....u will get allotment in both.....10 % discount may be for employees so most profitable..u can apply in policy holder quota with same pan card..Retail employees and policy holder in all categories with same pan card...Retail up to 2 lakh .... policy holder upto 2 lakh ....
103. Dalal| Link| Bookmark|
February 20, 2022 11:47:53 AM
(200+ Posts, 100+ Likes)
As per market gossip , Price band would be around embedded value 2100-2150. After Paytm another big issue in terms of high price and issue size. GMP of 15-20 Rs. is also a joke. Not even 1 % to cover brokerage expense. Rupee saved is rupee earned would be the strategy. Also we should not forgot it is 100% OFS diluting 5% stake to meet indirectly their 75000 Cr tax liability. Most probable issue opens on 14 March.
Dear friends, Today I shall discuss how big is this IPO ! I am somehow worried to see my friends succumbed to its volume. Yes , its very big . It is very big because the company is very big and thereby its shares will also be very big. In this fin year we have seen many an Ipo where fv =1 share has come out with sky kissing valuation and traded at far and far above much on the strength of infused gases of future prospects but in this case you will enjoy glorious past and present which you can extrapolate for any future derivation as becuse in the history of 56 years it has always surpassed the earlier years performance on all key indices. This is probably the only psu company, which could not be impacted by the 23 private players endowed with foreign funds (LI is a capital intensive business most at the initial years ) at the end of 22 long years. On the contrary, it has flourished in the face of competition and enjoys about 72 to 75 % market share at the year end computation. This shows the intrinsic strength of the company. In the year 2003-04 onwards private insurance people used to tell people that after 10 years you will not hear the name of LIC. Now they don't say like this. For sometime they say it was LICI now LIC as because it is private as "I" has vanished. But the fact is that the abbreviation LICI now designated to Life insurance council of india. Now, come to the point.
Friend of mine JETHALAL questioned the efficiency of LIC. Total asset of LIC is about 40 lac crore, for hdfc life it is 1.32 lac crore, for icici pru it is 2.3 lac cr, for sbi life it is 2.56 lac cr. LIC' s 40 lac cr asset amounts to 3.6 times the total asset of the 23 private insurer or 1.3 time of total AMU of MF industry. Lic is a giant in group insurance business including group superannuation business.Total premium income of lic is about 3.3 lac crore whereas the same for sbil and hdfcl it it is of the order of 45000 cr In the current year, in the first two quarter total premium income is 1.86 lac crore. For an LI company 30% of yly new premium comes in the first two quarters. So total premium income in this year will cross 4 lac crore for the first time and the total income may touch 6 lac crore. Income from rent 22000 cr, profit on sale/redemption may exceed 40000cr. Now come to an important aspect of quality of asset. Everybody knows that LIC is a property rich company. It has huge number of gigantic buildings and lands in prime places in all big cities. Most of its branches and higher offices are in own buildings unlike most other organisations. Now you know how the valuation of these city properties going up by leaps and bounds and at the same time saving the huge rental cost and earning rental as well. It remains mentioned that most of such assets are still in book value . So actual value of these assets are far greater than what is shown . @Au Oi has raised an important point that the delay in LIC IPO is for the complexity of the valuation. I have some information that there is some portion still not completely valuated and will be adjusted later on. Now take an important point of insurance penetration.Insurance penetration is defined as the total insurance premium collected divided by GDP. By 2021 it was pegged at 4.2% (life 3.2%+ non life 1%) but for last 10 yrs it is hovering around 2.7%. Thirty years back it was around 2.3% while there was only LIC. In this year due to brilliant performance of LIC and to some extent by the private players a big jump in this respect may be visible. Competitive advantage of LIC:- 1.GOVT has provided support in the form of 'Sovereign Guarantee' In our country two companies enjoy " soverign guarantee " A) Post Office B)LIC for sum assured and bonus. It means Govt will pay if they fail. It is free of cost but It has an imputed cost which we often forget. For banks upto 5 lac insurance protection is given by DICGC not by Govt. 2.Sentiment of middle class people. If I have to take a LI policy , I shall take it from LIC as because I Know that this is the only item which I shall not be able to deal with in case of a death claim and it will be dealt by some weaker hands like my wife and children. 3. A LI policy is most often sold than bought and continuation of it depends on the agents who are whole timers and reminds time to time.LIC has that network. 4.A good track record and image in the public mind. A top rated Brand in the country. 5.Mostly sell conventional policy which runs for years. 6. As it is very big with pan India presence with fairly homogeneous distribution and possibly the 7th largest in the world, it can easily bear the brunt of any adversity to which it may be exposed or any adverse selection as may come by. 7.LIC is the king in the equity market extracting long term investment benefit more than anybody else. Seldom is there any big company where LIC don't have at least 8 to 15% stake. In recent days people have seen how LIC has saved its own interest and the interest of Vedanta share holders. Vedanta wanted for delisting at a price of 85 and then 135 but LIC told that it will not sell any share less than 320. So Vedanta's ill intention was foiled. Now see the price of Vedanta. 8.LIC is the bail out master. It has not only recouped IDBI but will make huge profit of it. On different occasions at the time of big fall (say 2008, 2020) in the market LIC has accumulated / many say forced to buy , big stake which eventually gives many fold return. So it is a silent hunting cat . 9 LIC is an investment efficient company. It never keeps its fund idle. It is a giant in call market. It has fresh liquidity of atleast 1500 cr everyday to put to CBLO which gives interest income in short term until it settles its long term investment planning. You will be surprised to know that it has history of interest earning at a rate more than 30% at the time of liquidity crunch. 10. LIC is a long term investment giant who has ability to invest for 30/40 years. It has even ability to invest its future income as we have seen some five years ago ,it accorded to invest Rs 30000 per year for five years to Indian Railway at interest rate to vary from 7.84% to 8.24%.per annum compounding. 11. LIC undertakes this huge operation including the maintenance of huge property with the help of 92000 administrative staff and 22000 field officers. SBI has 2.45 lac staff, Hdfc bank have 1.2 lac , Icici bank 97000, Axis bank 78000and Idbi 17000. For now this is something about the efficiency of the company. SO LIC IS A KHANDANI COMPANY .
In the next post , I shall try to understand how big is the IPO and other relevant aspects. TO BE CONTINUED Thanks
Lic is big agreed... But valuation should be fair at ipo which can become big post listing... 2100 par lic ko paytm ki aatma milegi, being a psu.
99.3. K.Atar| Link| Bookmark|
February 18, 2022 1:11:16 PM
IPO Guru (1000+ Posts, 700+ Likes)
@Asoke Sir, As expected, always a masterpiece article, most respectfully, in next post - kindly mention income from investments like equity sales and dividends received from equity holdings.🙏
99.4. Jetha Lal| Link| Bookmark|
February 18, 2022 1:27:46 PM
IPO Guru (1000+ Posts, 2100+ Likes)
Thank Asoke Sir for your valuable efforts but in the process of proving your points and making LIC best company of World you forgot few points: 1. At present 95% of LIC business come from Agent and they have not developed multi channel selling points. LIC has 1.35 million Agent which is big cost burden of 22.5K crores/year. All private companies are far ahead in this. SBI Life has best advantage because of their across country branch network. They can easily cross sell their products and Parantage backing of SBI which has equivalent credibility and soundness as LIC.
2. LIC current market share is 66% in which 77% in Group insurance and 44% in individual insurance which was 81% and 56% respectively in 2016. Check in last one decade how Private players ate market share of LIC accross its product.
3. Every PSU company has huge property parcel but Market doesn't care about it. Behemoth companies like ONGC, REC, Coal India etc are trading below P/E of 10. 4. Post IPO Government will still own 95% and they will have to decrease with time so there will be consistent supply of share in market. 5. FII are not in mood of buying and atleast they won't in 2022. In last 5 months FII pulled out $11.5 billion which is more than what they pulled in 2008 i.e $9.4 billion.
Market doesn't care your glorious past and your dominance. It only care Profitability if you disappoint then be ready to bear the pain.Doesn't matter how much Asset you manage if you can't able to generate return for Shareholders market will punish without mercy.
Hope when you will do further analysis then you will include positive and negatives both in your analysis.
@ Jetha lal bhai I am happy to see your post. But the context of my post is how big is LIC in absolute term and in comparative term. Naturally negative points does not come under this purview. As and when point arises , I shall enumerate if it is really negative ( not as per inadequate perception of people). Points as to validity of agency commision and FII activities are different subject and I may give the interpretation if you so require but not just right now. Your point of psu overhung is valid but you may find several exception if you so desire but it is right that the overall perception is gloomy. Standards and value of properties of LIC against other companies mentioned by you is far and far greater as because these are in prime location of urban area. Must know one thing that value will prevail upon if not today , someday. Value seekers are the real hero of the market.
You have explained LIC very nicely like an investor presentation. I have no doubt about good & bad assets and investments of LIC. But my question is this issue some60+K Cr is too big to get oversubscribe. Moreover if war starts where will be markets. Even we ignore this Govt has to sell 25% in 3 years and this is just 3%. Market rate depends upon demand & supply not meare earning or assets. See PFC profits sky high assets huge book value 250+ dividend yield 8-10% or IRFC. So question is can it be another IRFC. All experts can shed light on this question.
@ Confusing Market Thank you for your post . War nobody knows. You have option IRFC or RVNL. Can you remember any 5% IPO.? Coal India observed its MPO obligation in nov'18 i.e 8 years after the issue. Further proposal for relaxation for big IPOs is pending with the authority .
@Nausikhiya Thank you for your sense of humour. @ Cem cho , @K Atar , @ Yash Chopra and others Happy to note that you have found it useful. Thank you all
Dear Friends, Before going to how big is this IPO, I am diverted and set to enumerate some negative points of the insurance companies as a whole complying with the request of @ JETHA LAL mota bhai .This is also for my credibility lest someone should think that I advocate it. 1 .Sec 27 of Insurance act 1938 subsequently extended to IRDAI act envisages that any insurance company conducting LI business in India will have to invest at least 75% of its fund in the Government securities and approved securities. So insurance companies can't game with the money. Consequently LIC has exposure of about 28 lack crore in the Government &social sector. This adds to the development of the infrastructure and the community as a whole. LIC' growth rate in this sector is 15%. People should think whether it is negative or positive. 2. Life insurance is a high risk business .For instance you can set up a bank in your village and enjoy interest margin. But you can't a LI because as a single death claim can wind you up. Enormous volume and homogeneous distribution is a protection to it. Suppose for any reason 1cr death claim comes.what will happen. Private companies are heavily exposed to it while for LIC , there is sovereign guarantee. So with this IPO there will be some off load of such risk and Government will get some rupees for development work. 3.LIC has long been advocating for a bank licence. But still have not got (except an edge in exchange of nose). A established bank may help LIC a lot. Those private insurers are successful who have banks. I think bankers should not be provided with insurance licence. The success of such insurers owes it origin to some unethical practice.At the time of providing with loan or in suitable circumstances they compel you to take LI policy , I think many have such experience. Though such policy does run for long but count for commission (to be taken by the interest people in the office) market share etc as JETHA LAL mota bhai has pointed out but at the year end computation LIC stands to a larger proportion. LIC is deprived of this opportunity. Take the example of EXIDE . In spite of having 65% market share in battery market in a very congenital atmosphere of EV ,it's share price is undervalued for this insurance overhung (Some may point out Amara raja but that has a different story) 4.LIC is mainly engaged in conventional type of business whereas the private companies in ULIP policies.ULIP market is boom when the share market is boom. So it is not a permanent type of business. In different occasions they gives the assurance of highest NAV and trap people. 5.LIC ' s properties are exposed to heavy taxation by corporation, municipality or local bodies as they are mostly in prime position. Sometimes these rates are 3 to 5 times the worthy rate.So these bodies squeez LIC. 6.Have you ever seen any 5% IPO ? As per prevailing regulation any very big company can come with 5% IPO but within 18 month it have to make it 10%. So it is correct that there will be further stake selling but not at a pace that some friends in this forum apprehend. In case of coal India , I have seen that the requisite regulatory obligation of MPO of 25% was observed in Nov'2018 I. e 8 years after the IPO. 7. There is a news that LIC has an O/s income tax payment of about 75000 cr Fact is that , it is the accumulated amount against 63 pending cases from 2003 The bone of contention is the method adopted. So it is a disputed case where LIC may have to pay some amount may be. This is a case of contingent liability. LI companies are always set to book contingent liability so that profit do not get inflated and future complication may be avoided. If anybody goes to court against any reputation of claim or otherwise, the company books the contingent liability which will be reverted to revenue in case the verdict favours. So in this case , it is not negative but may turn to be positive in future. 8.LIC has good stake in PSu including Government banks.The price of such bank shares are in doldrums. But with the help of different valid action by the present Government, situation improving.In future if this banks improve, there is scope of good fortune as the Npa will directly add to the profit of the bank and thereby increasing the share price. Already too big , so I stop. TO BE CONTINUED Thank you all
Let's wait for price and anchor book...too early to predict now...zomato story was similar..earlier GMP was low, but looking at mf and institutions buying interest, it performed well post listing....but it was listing gain candidate.... similarly now too early to give verdict.
96.2. Prasen Ipo| Link| Bookmark|
February 19, 2022 7:17:43 PM
Top Contributor (300+ Posts, 100+ Likes)
Agree with you amit ji Please share your view after anchor investor list . Waiting for your review.
Next year series of ofs for lic may be seen every quarter till govt stake fall to 51 percent or adani like number one rich prepared for takingover Lic it seems