LIC IPO: How good is it?

In our previous part of the LIC IPO story, we elaborated on the critical details of the IPO and important information about the company. Here we will answer some questions about LIC and evaluate it on parameters like management, financials, valuations, etc. IPO questions The company/business 1) Are the company's earnings before tax more than Rs 50 crore in the last 12 months? Yes. The company's profit before tax was Rs 2,980 crore in FY21. 2) Will LIC be able to scale up its business? Yes. Low insurance penetration in India and LIC's strong foothold across the country would help it scale up its business. 3) Does the company have recognisable brands truly valued by its customers? Yes. LIC brand is synonymous with life insurance in India. 4) Does LIC have high repeat customer usage? Yes. The company's persistency ratio (a measure representing the percentage of policyholders who continue to pay their renewal premium) stood at 88 per cent for the 13th month, 80 per cent for the 59th month and 79 per cent for the 61st month as of December 31, 2021. 5) Does the company have a credible moat? No. While the company's strong brand recognition, vast scale and decades of underwriting experience offer it a great advantage, it has been losing out to private competitors. 6) Is the company sufficiently robust to major regulatory or geopolitical risks? Yes. The company is sufficiently robust to significant regulatory or geopolitical risks. 7) Is the company's business immune from easy replication by new players? No. While there is a high cost of capital to start an insurance company, there a