Summary: Recently listed Life Insurance Corporation and Delhivery came out with their maiden quarterly result announcements on Monday. While LIC posted 18% year-on-year fall in its net profit, Delhivery’s net loss remained largely flat. Revenues for both the companies, however, rose 11.6% and over 100% respectively, showing robust operational performance. Yet, shares of LIC cracked about 3%, while those of Delhivery ended over 2% higher in a weak market. Going forward, analysts will remain watchful on both these companies given their respective fundamental concerns. Nirav Karkera, Head – Research, Fisdom says net profit fell 18% YoY to Rs 2,371.5 crore. Around 18% growth in net premium in a seasonally strong quarter is a dampener. Cost control remains a concern. That apart, analysts pointed out that LIC’s Q4 profit got a boost from writeback of provisions worth 1,000 crore rupees. This, they said, was a one-time gain and may not be available going forward. Besides, they also said low dividend outgo of Rs 1.5 per share isn’t rewarding Moreover, the deferment of declaration of the Embedded Value till June was another setback for investors. LIC’s EV at the end of September 2021 was 5.39 trillion rupees. However, almost 70% of LIC’s embedded value consists of equity mark-to-market gains, which inherently makes the EV more volatile. Nirav Karkera, Head - Research, Fisdom says LIC has done a better job on AUM front than private players. But it has been facing pressure on yields on its investment. He pointys that LIC could be staring at some mark-to-market losses. That said, stability in longer duration persistency ratios, improving gross net-performing asset, expectations of increased non-par products in the portfolio, and growth in topline are a saving grace. Thus, Gaurang Shah of Geojit Financial Services remains bullish on the stock from a long-term perspective. Shah says LIC is a long-term play and vast opportunities available in the sector. As results in upcoming quarter should be better, he says the stock may see Rs 1,000 levels in long-term. Coming to Delhivery, analysts suggest investors avoid entering the stock at current levels given that the firm is yet to turn profitable. AK Prabhakar, Head of Research, IDBI Capital says, Delhivery is a loss-making company. He suggests, avoid buying the stock at current levels. Revenue visibility, growth, stability are three factors to keep in mind before investing in any stock. In a nutshell, analysts suggest investors wait for a couple of quarters before they judge LIC’s performance. This is because it is a fundamentally strong company with profits on its books, but entered the markets amid macro-economic headwinds, increased competition from private players, and risks to return from investments. On the flipside, Delhivery’s profitability may be 2-3 years away which doesn’t give comfort to market watchers. On Wednesday, markets will react to India’s March quarter GDP numbers that were released after trading hours yesterday. That apart, Manufacturing PMI data, and auto sales data for May, stock-specific action, and global cues will also sway the indices.
