Portfolio: 3 ‘Cheapest’ Insurance Stocks to Watch Out for!
The carnage in the broader markets continued in today’s session as further developments from the Adani Group such as the cancellation of its recent INR 20,000 crores FPO jittered market participants. The insurance sector is one space that has taken a noticeable hit, especially after yesterday’s budget in which the FM removed the tax exemption status on proceeds from insurance policies where annual premium exceeds INR 5 lakh per year (except for proceeds on account of death).
These incidents have taken a toll on the insurance sector, leading to noticeable losses in many counters. If you are looking to seize this opportunity, here’s a list of 3 insurance stocks that are currently the cheapest on the NSE, as per their FY22 earnings.
General Insurance Corporation of India Limited
General Insurance Corporation of India (NS:) (GICRE) is a INR 28,298 crores big insurance company. In FY22, the company reported a 2.36% YoY increase in revenue to INR 49,739.31 crores, more than its current market capitalization. This translated into a net profit of INR 1,991.59 crores, the highest since FY19.
The stock has taken a hit of 9.13% in the last one week and now it’s trading at a P/E ratio of 11.86, making it the cheapest (profitable) insurance stock on the NSE. In fact, the P/B ratio is lower than 1, at 0.79. To further add to the appeal, it is trading at a dividend yield of 1.39%.
ICICI Lombard General Insurance Company Limited
The next stock on the list is ICICI Lombard General Insurance Company Ltd (NS:), with a market capitalization of INR 55,257 crores. It posted its highest-ever revenue of INR 16,836.02 crores in FY22, however, due to a dip in EBITDA, net profit declined 13.72% YoY to INR 1,271.02 crores.
Mutual funds have been increasing their stake, from 8.49% in September 2021 to 14.3% in December 2022. The stock fell 1.79% in the last one week and is currently trading at a P/E ratio of 43.48, making it the cheapest large-cap insurance stock.
Bajaj Finserv Limited
Bajaj Finserv Ltd (NS:) is a holding company whose subsidiaries are engaged in the business of financial services, insurance and wealth management, having a market capitalization of INR 2,01,727 crores. Both the FY22 revenue of INR 68,438.98 crores and profit of INR 4,556.77 crores were the highest ever.
A 3.26% plunge in the last one week made the stock available at a P/E ratio of 44.27, minutely more expensive than ICICI Lombard. Looking at the book value, it’s less expensive than ICICI Lombard, with a P/B ratio of 3.04, compared to the latter’s P/B ratio of 6.01.
