Life Insurance Corporation of India (LICI) is the largest and oldest life insurance company in India, with a market share of over 66% in the industry. LICI is also one of the most valuable companies in India, with a market capitalization of over Rs. 4.2 lakh crore as of September 2021. LICI’s share price has been on an upward trend since its listing on the National Stock Exchange (NSE) in January 2020, reaching a 52-week high of Rs. 754.25 in July 2021. In this blog post, we will tell you how to invest in LICI’s shares and what are the benefits and risks involved.
How to Invest in LICI’s Shares?
To invest in LICI’s shares, you need to follow these steps:
- Open a trading account: You need to open a trading account with a registered broker or a financial institution that offers online trading services. You can compare the features and charges of different brokers and choose the one that suits your needs and budget.
- Transfer funds to your trading account: You need to transfer funds to your trading account from your bank account or any other source. You can use various modes of payment, such as net banking, credit card, debit card, UPI, or NEFT.
- Place an order for LICI’s shares: You need to place an order for LICI’s shares on the NSE platform using your trading account. You can either buy or sell LICI’s shares at the current market price or at a limit price that you specify. You can also place a stop-loss order to limit your losses in case the share price moves against your expectation.
- Settle your trade: You need to settle your trade by paying or receiving the amount of money involved in the transaction. The settlement cycle for equity trades in India is T+2, which means that the trade is settled on the second working day after the trade date.
What are the Benefits of Investing in LICI’s Shares?
Investing in LICI’s shares can offer you several benefits, such as:
- Growth potential: LICI has a strong growth potential, given its dominant position in the Indian life insurance industry, its diversified product portfolio, its large customer base, and its digital transformation initiatives. LICI has been consistently growing its premium income, policy sales, net profit, earnings per share, and assets under management. LICI has also announced its plans to launch its initial public offering (IPO) in the current fiscal year, which will be the largest IPO in India’s history and will enhance its transparency, governance, and accountability.
- Value proposition: LICI’s shares are undervalued compared to its peers and offer a good value proposition to investors. LICI’s price-to-earnings ratio was 9.31 as of September 2021, which was lower than the industry average of 19.03. This indicates that LICI’s shares are trading at a discount to their earnings potential. LICI’s price-to-book ratio was 9.25 as of September 2021, which was also lower than the industry average of 10.64. This indicates that LICI’s shares are trading below their book value. LICI’s dividend yield was 0.45% as of September 2021, which was higher than the industry average of 0.35%. This indicates that LICI’s shares offer a good return to investors.
- Risk diversification: Investing in LICI’s shares can help you diversify your portfolio and reduce your overall risk exposure. LICI’s shares have a low beta of 0.89 as of September 2021, which means that they are less volatile than the market and tend to move in line with the market movements. LICI’s shares also have a low correlation with other sectors and asset classes, which means that they tend to perform differently from them and can help you balance your portfolio returns.
What are the Risks of Investing in LICI’s Shares?
Investing in LICI’s shares can also involve some risks, such as:
- Market risk: LICI’s share price can be affected by various factors that influence the market sentiment and demand-supply dynamics, such as macroeconomic conditions, interest rates, inflation, exchange rates, regulatory changes, political events, natural disasters, pandemics, and so on. These factors can cause fluctuations in LICI’s share price and affect your returns.
- Competition risk: LICI faces competition from various private insurers who offer innovative products and services at competitive prices and target different segments of customers. These competitors can erode LICI’s market share and profitability and pose a threat to its growth prospects.
- Operational risk: LICI faces operational risks such as fraud, cyberattacks, data breaches, system failures, human errors, legal disputes, and so on. These risks can damage LICI’s reputation, customer trust, and financial performance and expose it to liabilities and penalties.
LICI is a market leader in the Indian life insurance industry, with a strong growth potential, value proposition, and competitive edge. LICI’s share price has been on an upward trend since its listing on the NSE in January 2020, reflecting its performance and potential. LICI has a bright future outlook, given its IPO plans, digital transformation, product diversification, and market expansion. LICI’s shares are undervalued compared to its peers and offer a good return to investors. However, investing in LICI’s shares also involves some risks, such as market risk, competition risk, and operational risk. Therefore, you should do your own research and analysis before investing in LICI’s shares and consult your financial advisor if needed.