LIC Q3 result: Net profit jumps to 235 crore

Life Insurance Corporation (LIC) on Friday announced its financial results for the third quarter ending December 31 (2021), ahead of its planned IPO (Initial Public Offering). 

The state-run insurer reported a rise in its net profit for Q3FY22 to Rs 234.91 crore from a meagre Rs 0.91 crore (Rs 90 lakh) logged in the same period last year, according to LIC's website.

The profit for the first nine months of FY22, April-December 2021, climbed to Rs 1,642.78 crore from Rs 7.08 crore in the corresponding period a year earlier.

Capital markets regulator Securities and Exchange Board of India (SEBI) had recently approved LIC's IPO worth around Rs 63,000 crore. 

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However, the government, according to reports, is mulling to delay the issue amid the Russia-Ukraine war, although there has not been any formal announcement of it being delayed. LIC had in February this year filed its draft papers with SEBI for its IPO

The government plans to offload a five per cent stake in the PSU (Public Sector Undertaking). The move could fetch it more than Rs 60,000 crore to the exchequer. 

LIC's IPO would be an offer for sale (OFS) of 31.6 crore equity shares (or 5 per cent) by the government, which has a 100 per cent stake in the insurance giant. There will be no fresh issue of shares by LIC

Also, employees and policyholders of the insurance behemoth would get a discount over the floor price.

LIC's embedded value, which is a measure of the consolidated shareholders' value in an insurance company, has been pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.

Although the DRHP does not disclose the market valuation of LIC, as per industry standards, it would be about three times the embedded value or around Rs 16 lakh crore.

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The government holds 100 per cent stake or over 632.49 crore shares in LIC. The face value of shares is Rs 10 apiece

The LIC IPO would be the biggest IPO in the history of Indian stock market and once listed, LIC's market valuation would be comparable to top companies like RIL and TCS. So far, the amount mobilised from IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

As per norms, up to 5 per cent of the issue size can be reserved for employees and up to 10 per cent for policyholders. 

The IPO of LIC is expected by March and the proceeds would be crucial to meet the revised disinvestment target of Rs 78,000 crore for the current fiscal year.

So far, the government has raised Rs 12,030 crore through CPSE disinvestment and Air India strategic sale this fiscal year.