Have you gone through this Life Insurance corporation Balance Sheet

Life Insurance Corporation Balance Sheet 

The government wants to bring an IPO of LIC in the next financial year at all costs. Finance Minister Nirmala Sitharaman indicated this in the budget on 1 February.

Actually, the government had made a plan to launch LIC's IPO in the current financial year, which could not be completed.

The government has included the IPO of LIC in the Finance Bill 2021. An amendment to the LIC Act will be necessary for the IPO.

The board of LIC will have to be changed. Its accounting procedure will be changed and Rs 25,000 crore will be poured as paid-up capital.

Talking about the issue size, the total number of shares will go up to 2,500 crores with the government putting paid-up capital of Rs 25,000 crore.

This will happen when the face value of each share is 10 rupees.

The government has announced to sell its 10 percent stake in LIC's IPO. 

This means that the government is going to sell 250 crore shares in the IPO of the company. Out of this, 10 percent i.e. around 25 crore shares will be reserved for the policyholders of LIC.

By the end of FY 2019-20, LIC had a total of 28.92 crore policyholders. 

This means that if the government sells 250 crore shares, it will be difficult for all policyholders to get shares.

The government wants to raise funds from 1 lakh crore to 1.2 lakh crore rupees through this issue. 

If the government aims to raise this much fund by selling a 10 percent stake, the valuation of LIC can be Rs 10 to 12 lakh crores.

At a valuation of Rs 12 lakh crore, LIC shares are expected to be priced around Rs 480, which is 50 percent lower than SBI Life Insurance and 44 percent lower than HDFC Life Insurance.

Analysts tracking the life insurance sector believe that LIC has invested in many unlisted companies and land. 

Apart from this, it has made large investments in many sluggish companies and government units. This discourages investors.

According to many analysts, SBI Life shares are trading at 36.1 times the estimated earnings for FY 2021-22, while HDFC Life shares are trading at 87.7 times.

Merchant bankers will find it difficult for LIC to give such an expensive valuation.

Even on a basic basis, the valuation of the company is not very attractive. LIC is consistently lagging behind the private sector after the economy reopened in June. 

By December in the current financial year, LIC has lost its market share by 160 basis points.

According to JM Financial, the company's market share increased by 230 basis points in the year 2019-20. But now it has slipped to its lowest level. 

However, LIC still holds the largest share in the life insurance market. There are thousands of agents in every corner of the country to sell its products.

As of now, there is a perception among the investment community that LIC is a hard-working investor for the government. 

Whether one invests or not, LIC's treasury remains open to help the government. LIC is an advanced name in the process of disinvestment.

The Chief Investment Officer of an insurance company said, "It will be very interesting to see to what extent the government shares the 'chicken laying eggs' with the common people.

" There are more discussions regarding the IPO of LIC, but selling the moon on the price of gold will be crooked for the government.