September 22, 2019 | Investopaper
Siddhartha Insurance is one of the top non-life insurance companies in Nepal. But lately, after many new insurance companies entered the non-life insurance sector (20 non-life companies now in total), it has been challenging for SIL to increase the premium amount. As a result, the company reported a fall in net profit by 27 percent alone this year. Likewise, after the reporting of the bad financial report, the share price of the company has declined significantly.
Also Read: Best Non-Life Insurance Companies In Nepal
So, from an investor’s perspective, this could be a good time to buy SIL stocks. On the other hand, one may argue that it may be time to sell stocks of SIL since the company has already met the minimum capital requirement of 1 Arab and the profit generated by the company may not be able to provide a satisfying return to the shareholders.
In this article, we will talk about the price history of Siddhartha Insurance from January 2013 to September 19, 2019. The graph below shows the price history of Siddhartha Insurance.
In the early month of 2013, SIL stock was trading at around Rs. 206. The maximum recorded price in which Siddhartha stock traded that year was Rs. 424. The following year, Siddhartha Insurance stock made a sharp movement to Rs. 865. The average trading price was Rs. 656. The next year also the company stock gained value. After NRB made it mandatory to meet a minimum paid-up capital requirement of 1 Arab to non-life insurance companies, the price skyrocketed during the bullish stock market. In 2016, the maximum recorded price of SIL stock was Rs. 2615 while the average trading price was above Rs. 1800 range.
Now let us shift our focus to the bear market that started from the second half of 2016 and is still existent. The average trading price of Siddhartha shares in the last three year period till September 20, 2019, is Rs.898. In this period, Siddhartha Insurance has distributed attractive bonus shares that have increased the number of shares by almost 100 percent. The share price of Siddhartha Insurance in early 2017 was Rs. 1311 which has slipped to Rs. 388, a decline of 70.40 percent.
HOW MUCH WOULD YOU HAVE POCKETED IF YOU HAVE BOUGHT SIDDHARTHA INSURANCE SHARES IN EARLY 2013?
If you had purchased the shares of SIL in early 2013, then the number of shares you purchased would increase by almost 4 times. Let us illustrate by taking 100 shares for easy calculation. Your initial 100 unit shares would now grow to 400 unit shares after receiving bonus & right shares regularly. Now, let us assume you paid Rs. 286 ( Jan 1, 2013 closing price) to buy Siddhartha Insurance shares, then your total investment would be Rs, 28600 ( broker commission and other fees not included) to buy 100 unit shares of SIL [It doesn’t include the amount for right share investment during this period]. As of today, Siddhartha is trading at Rs. 388. So, your total worth would be Rs. 155,200, a total increase of net-worth by 5.42 times . Likewise, the company has distributed a cash dividend only for tax purpose during this period.
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To see the full company analysis of Siddhartha Insurance Company, click here.