Look at the in-depth and technical analysis of Gurans Life Insurance Company Limited

~ Aakash Capital Limited

Introduction

Gurans Life Insurance Co. Ltd (GLICL) was established and registered under Company Act 2063 B.S and Insurance Act 2049 as a Public Limited Company to operate Life Insurance Business in Chaitra 18, 2064. The company has been offering different comprehensive insurance policy for different categorization of people on the basis of age group and financial status of life.  Targeting those categorization of people, it has product like Gurans Savadhik, Gurans Agrim Bhuktani, Gurans Jeevan Shree, Gurans Naulo/Bal Surakshya, Gurans Sanjeevani, Gurans Jeevan Rakshyak, Gurans Baideshik Rojgar, Gurans Annual Cash Back and Gurans Surakchit.

Gurans Life Insurance Co .Ltd. is promoted by Dugar Group, Sunrise Bank Ltd. along with group of diverse and renowned prominent Businessmen, Industrialist and Legal professionals. It is the only life insurance company in Nepal that is promoted by a commercial bank and legal professionals.

Board of Director

The Board of Director of Gurans Life Insurance Company Limited consists of 3 from promoters group, 3 from public shareholders and 1 representative from Sunrise Bank Limited. The Board of Director is chaired by Mr. Vivek Dugar and Mr. Narayan Kumar Bhattrai is the current CEO of the company.

Current Share Holding Composition

Gurans Life Insurance Co. Ltd. has a total authorized capital of Rs. 59.10 crore. It has 70:30 promoter-public shareholdings ratio where 30 per cent of issued capital has been allotted to the public through IPO. It has 32 promoters and total shareholders of the company are approximately more than 26,000.

Snapshot of performance

Financial Performance

Operations

Based on the data presented above, it can be seen that the company has been growing at a steady rate. Positive indication can be seen from the constant incremental of Reserve and Surplus over the five year review periods. At the end of 2016/17, it has Rs 206.619 million in its reserve and surplus.  It has increased by CAGR of 20.416 percent from 2013/14 to 2016/17. Similarly, Life Insurance Fund has continuously increased by CAGR 47.96 percent in the last five review periods. The net profit of the company has been somewhat erratic; the profit declined in FY 2013/14, 2014/15 and 2016/17 whereas increased in 2015/16. However, average net profit has stood at Rs. 54.14 million over the period of five years. Similarly, net profit margin has increased by 6.78 per cent on average over 5 year periods having highest incremental growth in 2015/16 by 6.76 per cent while lowest growth in 2014/15 by 4.052 per cent. 

The business of the company is increasing in a steady pace. The total number of policies sold has grown by CAGR of satisfactory 26.20 per cent in the review periods.  As a result, the total premium collected has also grown in a fair way in an average of 739.63 million.  Similarly, the company has also been injecting capital so as to take the advantage of increasing dynamic market. The earning per share of the company has decreased from 2012/13 to 2014/15. Then it has again decreased after increasing in 2015/16. However, oscillating earning per has remained 10.6 on average over the five year of comparing period. Net worth for share has continuously increased. The return on assets and return on equity has been satisfactory. ROA has always remained more than 1 per cent, with 2.604 percent on average over the 5 years.  ROE gained highest increment in 2015/16 and lowest gain in 2014/15. However, it has able to maintain 8.5 per cent ROE increment on average. Therefore, it can be said that the company has been using its assets and equity properly in generating income.

Quarter to quarter comparison

Based on above data of quarter to quarter comparison, likewise as seen in five year comparison, the company has experienced healthy business growth though the most of the fundamental variables are still below industry average. During the third quarter of 2018/19, Paid up capital has increased to 641 million from 594 million by 8 per cent compared to corresponding period of previous quarter. Except this, reserve and surplus, Insurance Fund, Net Profit and Net premium all has increased by double digit in the same period. To be precise, reserve and Surplus has increased by 11.51 per cent from 207 million to 231 million, Insurance Fund by whooping 35.08 per cent from 3862 million to 5218 million.  Similarly, the company reported the net profit of 565 million which has increased by staggering 41.03 per cent which all indicate positive growth indication.

However, it can be seen that income from loan, investment has decreased by 78.68 per cent which is great concern. On return side, both ROE and ROA has increased from 6.46 per cent to 8.32 per cent and from 1.08 per cent to 1.15 per cent respectively. However, ROA is still below the industry average.

It is clear from the quarter-to-quarter analysis that even though the company has done fairly well in comparison to previous quarter, the company is still behind the industry average in almost all variables.

Technical Analysis

(Source: SS PRO, Sharesansar.com)

Based on above weekly chart, the share price of GLICL seems to be in positive trend. Currently, its price is in short term support zone of around Rs.460 There seems unstable transaction of shares which have resulted high volatility in its share price.

Technical Indicators

(Note: As on 7/17/2019)

Concluding remarks

The company has long track record and shared brand name with Dugar Group and has an institutional promoter support from Sunrise Bank Limited. Along with it, the company has robust business growth; high growth of Reserve and Surplus, Insurance fund, Net profit and the number of policy all prove that. The company has a third highest market share in the insurance industry in terms of total premium collection, accounting to 5.71% of the total industry after Nepal Life Insurance Company and Life Insurance Corporation Nepal with 68.2% and 7.15 % respectively. With new life insurance companies entering the market, the way forward for the company would be to tackle competition by scaling up the operations while maintaining the solvency ratio, investment quality, profitability ratio and diversifying its business including wide spectrum and walks of life.

Disclaimers: This document has been prepared by Aakash Capital Limited for information and illustration purpose only. The information provided in this document is subject to change. While this information has been obtained from sources believed to be reliable, Aakash Capital is not liable for erroneous information obtained from the sources. Aakash Capital, its directors and employees are not liable/responsible for any direct, indirect or consequential loss arising from the use of this document or its contents. Past performance is no indication of future results. Aakash Capital is regulated by Securities Board of Nepal.