Winning Bizness Desk

Mumbai. Truth is always strenge. India's no.1 life insurance company Life Insurance Corporation of India (LIC) reported a profit of Rs 234.9 crore in the December 2021 quarter. What looks really unbelievable is that in the same quarter a year ago, it had made a profit of only 90 lakh rupees. Notably, the government is planning to file the final paper for the IPO with the market regulator SEBI soon. These papers will contain information about the price band, discount for the policyholder and retail buyers and the actual number of shares to be sold.

Renewal premium increased

LIC's first year premium was Rs 7,957.37 crore in the same quarter last year, which increased to Rs 8,748.55 crore. Renewal premium increased from Rs 54,986.72 crore to Rs 56,822.49 crore. The total premium increased by 0.78% to 97,761.20 from Rs 97,008.05 crore. India's biggest IPO till date is of Paytm. Paytm had raised Rs 18,300 crore in 2021. This was followed by Coal India (2010) at around Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

IPO in the way

The government is looking to launch an IPO in this fiscal, but there is volatility in the stock market due to the Russo-Ukraine war. LIC had filed DRHP for LIC's IPO on February 13. Earlier this week, Sebi had cleared the draft papers, paving the way for the share sale. To meet the disinvestment target of Rs 78,000 crore in the current fiscal, the government has to invest around Rs 31.6 crore or 5 per cent in the life insurance firm. Expected to raise more than Rs 60,000 crore by selling % shares.

Embedded value of Rs 5.4 lakh crore

If LIC's IPO is not launched by March, it will not be possible for the government to achieve its revised disinvestment target in the current financial year. As per the draft prospectus, the embedded value of LIC was estimated to be around Rs 5.4 lakh crore as on September 30, 2021. However, DRHP does not reveal the market valuation of LIC. As per industry standards, it will be around 3 times the embedded value.