Is Insurance Stock Overvalued or Undervalued?

Mar 10, 2020 11:00 AM Merolagani

The stock price of both life and non-life insurance companies are apparently overvalued in the domestic secondary market.  The price of insurance stocks is seen overvalued as per the calculation made under Graham's Fair Value.

Out of the listed life insurance companies, Life Insurance Corporation is the most overvalued stock. The company with Graham's Fair Value of 145.79 is traded at Rs 1,500 for the last transaction. Based on the calculation, the stock is overvalued by 90.28 percent.

Similarly, out of the listed non-life insurance companies, Rastriya Beema Company is the most overvalued stock. The company has Graham's Fair Value of 2,408.95, however, its last traded price is at Rs 10,001. The stock is 75.91 percent overvalued.

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