LIC, which is preparing to bring IPO, can become the most valuable company in the country. LIC is bringing the country’s biggest IPO. For this, it has submitted the draft to the market regulator SEBI. According to this, the Indian Embedded Value of the company as of September 30, 2021 was Rs 539,686 crore. Generally, the market cap of an insurance company is four times this.
The embedded value of a life insurance company includes the current value of future profits plus the adjusted net value. This method is used to calculate the value of insurance companies all over the world. In dollar terms, the embedded value of LIC works out to $72 billion. This is according to earlier reports. According to media reports, the market value of the company can be four times this.
what will be the market cap
If this happens, then the market value of LIC will be $ 288 billion i.e. about 22 lakh crore rupees. This will make LIC the largest valued company in the country. Right now this title is with Mukesh Ambani’s company Reliance Industries, which has a market cap of Rs 16 lakh crore.
As far as the insurance sector is concerned, HDFC Life’s market cap is 4.25 times higher than its December quarter embedded value (Rs 29,540 crore). Similarly, the market cap of ICICI Prudential Life Insurance is 2.46 times and SBI Life Insurance is 3.21 times higher than the embedded value in September 2021.
Government’s deficit will be less
The Indian Embedded Value (IEV) has been calculated by Milliman, a US-based actuarial and consulting firm. The government had entrusted this work to the company. The government has not yet disclosed how much money it wants to raise by selling stake in LIC. According to the documents submitted by SEBI, the government will sell 31,62,49,885 shares through this IPO. The government hopes that the proceeds from this IPO will help it reduce losses in this financial year.