*****‘Time in the market more important than timing the market’ – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/todays-paper/tp-news/time-in-the-market-more-important-than-timing-the-market/article65365094.ece

Strong demand from anchor and retail investors; market volatility may stabilise soon, says LIC Chairman

“Why should anyone worry about valuation? It is not fair to compare us with peers. We are very large,” said MR Kumar, Chairman, Life Insurance Corporation of India. Responding to questions on the timing, he stressed that LIC did not go for an IPO during the pandemic. Ahead of its initial public offering that opens on May 4, Kumar spoke to BusinessLine on plans post-listing, and stressed that the Corporation’s profile will not change, but its way of doing some things may change. Excerpts:

How do you see LIC’s profile improving post the IPO? What is your vision for it after that?

LIC has gone through many phases — the first was nationalisation, second was opening up of the market and the third listing. Listing brings more responsibility in terms of shareholder connect and creating shareholder value. The Corporation is geared for it. We have been very competitive in the market and have been watching other listed players.

LIC’s profile will not change much, but the way we do some things could undergo change. We might tweak marketing activity; we might try to get into more of bancassurance.

The agency channel still commands more than 96 per cent. We can improve volumes of the bancassurance channel because we have the highest number of bank outlets at 60,000, which can really work.

We want to totally recast our digital marketing. We have already tied up with Policybazaar, through which one or two products will be sold initially, and then maybe through the portal, once its ready. We are a well-known investor. We command high value and have a sizeable equity.

Our strategy has always been to buy and hold, to take care of long-term interests of policyholders.

We do not want to change that. When we have products — ULIPs where CAGR or NAV is important — we might tweak that part wherever required.

Investor demand

seems very strong

despite concerns

on the Ukraine crisis?

I see very strong demand both from anchors and retail investors. There is reservation by policyholders with a good discount of over 6 per cent. I am sure they will invest big. Demat accounts have picked up pace quite a bit even after February and March. The market is seeing new investors who are interested in starting equity with LIC’s IPO.

What is your take

on the concerns

over valuation of LIC?

Why should anyone worry about valuation? It is not fair to compare us with peers; we are very large.

Therefore, in terms of PE multiple, we must look at similarly placed insurance companies, maybe somewhere in China.

We compare favourably in terms of PE multiple. That is the way we wanted to go. The government also felt that we should reward first time policyholders and shareholders.

Is the volatility in domestic stock markets a concern?

If you look at the slightly long-term view, from March onwards, it has picked up and will soon stabilise. The war will have some impact. We are not in a silo, but we are able to manage our markets despite much of the was overhang.

There have been

many questions on

the timing of the IPO?

There is no such thing as timing the market. Time in the market is more important than timing the market. Any time is a good time. When there was a serious issue like Covid, we never did it.

The Finance Ministry had announced it in the Budget 2020. We still had preparations to make and it was not a good time with the pandemic, and then the war came.

Now, I think things have settled down. Looking ahead, any time is a good time. Having done all the work, we didn’t want to delay it any further.

Post-listing, will LIC still continue to step in

to help the government?

Our stance on this has been very clear and consistent. Even if the government wants it, it is we who will take the call. Our investment committee decides if it is beneficial or not. Some investments have gone southwards, but many PSU stocks are giving good dividend.

We are into buy and hold, so we are not really worried. Ultimately, the value will get accreted. Now that we have a board in place with good independent directors, there will be more diligence in investments.

What is happening on the IDBI Bank and LIC Housing Finance (LIC HF) issue?

The government and LIC are trying to divest stakes in IDBI Bank. We would like to continue the partnership, and make it a small holding, if not a major holding. If that happens quickly, then the issue between LIC HF and IDBI Bank will cease to exist.

If not, we will have to find a solution. One way could be to ask IDBI to source loans for LIC HF, the way HDFC and HDFC Bank were operating. It is a question of what happens first. We will wait and watch.

How is LIC preparing for

the post-listing stage?

We have had strategic meetings with all senior executives. Post the listing, we will meet all senior divisional managers, zonal managers, to put things in perspective and give a roadmap to all our divisions and branches. The stock market reacts to that. We will also have analyst meetings from the second and third quarter onwards.

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