Strictly from a value investing perspective, Prime Life Insurance Co Ltd is a very undervalued stock that has been flowing under the radar amongst a sea of depressingly overvalued scrips in Nepse right now.

A few reasons:

The company has zero debt.

Equity-to-asset ratio is 0.95. This means 95 percentage of the company’s assets are owned by investors and not leveraged and therefore could come under the control of debtholders (such as banks) in the event of bankruptcy. The higher the equity-to-asset ratio, the less leveraged the company is, meaning that a larger percentage of its assets are owned by the company and its investors.

Beneish M-Score is -3.07 which implies that the company is unlikely to have manipulated its earnings.

Prime Life Insurance Co has a Piotroski F-score of 4 indicating the company’s financial situation is typical for a stable company. The stock has a Positive ROA, Positive CFROA, Lower Leverage yoy, as well as Less Shares Outstanding yoy.

The only minor issue of significance with the financials of PLIC is that the company seems to be paying lower tax, which may boast earnings, and may not be sustainable.

I believe that based on the company’s past returns and growth as well as historical multiples the stock has traded at, it’s fair value should be 1220 Rs, yet it’s at a steep discount of 781 as of LTP.

Disclaimer: Do your own DD.

Disclosure: I am long on PLIC.

More at: r/NepalStock by PhoenixRising656

6 comments
  1. How does these data make plic undervalued? I thought pe is useless in life insurance sector as the actual profit can only be calculated by actuarial professional and the reported earning is just to meet regulatory condition.

  2. I don’t have much fundamental knowledge just know few things about pe eps roe yoy but learnt some new things thanks and keep posting other analysis too.

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