LIC manages assets of Rs 39 lakh crores, or more money than the entire mutual fund industry combined. As per a note by GEPL Capital on the LIC IPO, LIC invests these funds across stocks and bonds. They own 4 per cent of all listed stocks in India and more government bonds than the RBI.

The note said that LIC is the leading insurance provider company in India and fifth largest global insurer by GWP. Among the challenges, the note states that LIC has poor new policy growth as they continue losing market share to private insurance players, especially in urban areas.

In addition, the margin in insurance plus investment products is low. It's very difficult to value LIC as the business model is unlike any other company. LIC collects money upfront and then promises to compensate policyholders at a later stage. The premiums they collect (part insurance and part investment) cannot be recognised as revenue.

The embedded value for LIC is Rs 5,39,686 crore and its post issue implied market capitalisation is Rs 6,00,242 crore which is 11.2 per cent premium to its IEV.

"The Mcap to EV ratio for its listed peers it in the range of 1.5x to 2.5x , Hence we believe Valuations of LIC with its majestic size are priced reasonably," the note said.

As data suggest, its business is largely driven by agent based model (90 per cent plus), hence a larger digital on boarding of its network will be needed to pursue growth ahead.

"However, with Rs 6 lakh cr market cap on a PAT of Rs 3,000 crore makes a PE ratio of 200x. In our view PE ratio is not comparable with private players as LIC's distribution policy is now changed and higher allocation towards shareholders account in upcoming future to rise and thereby cool-off in earnings multiple.

"With its majestic networks and expected double digit growth the industry complied with attractive valuation compared with peers makes LIC IPO a lucrative investment," the note said.