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As the index is down for the 5th straight session, falling 0.06% to 17,545, by 12:57 PM IST, it might be a good time to accumulate some of the fundamentally strong and yet beaten-down counters for the long term.
One stock that satisfies both these criteria is Life Insurance Corporation of India (NS:), which is the biggest life insurer in the country with a market capitalization of INR 3,76,938 crores, making it the 11th largest listed company on the NSE. The stock has fallen considerably from its all-time high price of INR 918.95, marked on the listing day. From there the stock is now down to INR 590, reflecting a severe cut of over 35% in less than a year. Most investors might not know but LIC is the top-most valuable Indian brand in the Global Fortune 500 list, ranked at the 98th spot.
Image Description: Mix of LIC agents by age group and tenure
Image Source: LIC’s corporate presentation
It has an unmatched distribution network with over 13.2 lakh exclusive LIC agents and 3,623 branches and satellite offices spread in each and every nook & corner of the country and is capable of retaining the company’s market-leading position. More importantly, the distribution of agents (52% in Metropolitan, urban and semi-urban areas and 48% in rural areas) makes it aptly placed to take the advantage of current urban growth and impending rural growth.
In 9M FY23, the company settled a total death claim of INR 17,350 crores, significantly less than INR 29,271 crores settled in the same period last year, despite improving its settlement ratio from 96.1% to 97.43%. This is quite commendable. Total premium income in 9M FY23 jumped 20% YoY to INR 3,42,244 crores, leading its market share (in premium) to increase to 65.38%.
While the stock was definitely not lucrative at the IPO price, it might make a good deal at the CMP. The stock is just an inch away from an all-time low of INR 583.15 and therefore it is not suitable to buy for the short term due to a strong downtrend. No doubt it is the second-most expensive insurance firm with a P/E ratio of 91.39 (as per FY22 earnings) but the market leaders always command higher premiums. For a long-term portfolio, especially if you are considering some insurance stocks for the next 3 years, you should have a look at LIC at this price. As per Investing Pro P/E multiple model, the fair value of LIC is INR 749.
Read More: 3 Banks Thrown to ‘Lowest’ Valuation after Market-Wide Selling!
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