November 19, 2020 | Investopaper
Shikhar Insurance Company Limited (SICL) and Sagarmatha Insurance Company Limited (SIC) are the two leading non-life (general) insurance companies of Nepal. Both the companies have remained favorite stocks among the investment community of Nepal. They have provided attractive returns to the shareholders in the form of dividend as well as capital gain. Here, we will try to make the financial comparison between these two non life insurance companies. We will include the recent reports for the computation of data.
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Shikhar Insurance Vs Sagarmatha Insurance [First Quarter, FY 2077/78]
The comparative study will be based on the following major indicators.
Paid-up Capital, Reserve & Surplus And Insurance Fund
As of Ashwin end 2077, Shikhar Insurance has a paid-up capital of Rs 137.45 crores with Rs 89.75 crores as reserve and surplus. Likewise, the insurance fund stand at Rs 111.85. On the other hand, Sagarmatha Insurance has a paid-up capital of Rs 100.12 crores. The reserve and insurance fund are at Rs 55.21 crores and Rs 65.93 crores respectively.
Total Premium, Net Premium And Net Claim
In the three months period of the fiscal year 2077/78, Shikhar Insurance has collected a total and net premium of Rs 90.44 crores and Rs 43.4 crores respectively. Whereas Sagarmatha Insurance has total premium collection of 73.62 crores while the net premium stood at Rs 35.81 crores.
Similarly, until the first quarter of this year, SICL has paid a net claim of Rs 14.22 crores while SIC has net claim payment of Rs 13.07 crores.
Shikhar Insurance has total investment of Rs 337.53 crores whereas the total investment of Sagarmatha Insurance stand at Rs 294.93 crores.
Note: The total investment includes long term and short term investment.
Earnings Per Share And Networth Per Share
Based on the first quarterly report, SICL has an annualized EPS of Rs 35.5 while the per share networth is Rs 260.5. Likewise, Sagarmatha Insurance has annualized EPS of Rs 22.23 and per share networth of Rs 234.44.
Market Price Per Share And Market Capitalization
As of November 18, 2020 [Mangsir 3, 2077], Shikhar Insurance (SICL) is trading at Rs 1603 while Sagarmatha Insurance (SICL) has a share price of Rs 973. At these prices, SICL has a market value of Rs 22.03 Arba while the market capitalization of SIC is only Rs 9.74 Arba.
The comparision between Shikhar Insurance and Sagarmatha Insurance is summarized in the table below:
|Financial Indicators||Shikhar Insurance||Sagarmatha Insurance|
|Paid-up Capital (Rs. ‘crores’)||137.45||100.12|
|Reserve & Surplus (Rs. ‘crores’)||89.75||55.21|
|Insurance Fund (Rs. ‘crores’)||111.85||65.93|
|Total Investments (Rs. ‘crores’)||337.53||294.93|
|Total Premium (Rs. ‘crores’)||90.44||73.62|
|Net Premium (Rs. ‘crores’)||43.4||35.81|
|Net Claim (Rs. ‘crores’)||14.22||13.07|
|Total Outstanding Claim (Rs. ‘crores’)||84.96||92.05|
|Net Profit (Rs. ‘crores’)||12.23||5.56|
|Management Expenses (Rs. ‘crores’)||8.84||6.83|
|Number Of Policies||76,935||50,824|
|Earnings Per Share (Rs.)||35.5||22.23|
|Networth Per Share (Rs.)||260.5||234.44|
|Market Price Per Share (Rs.) [Mangsir 3, 2077]||1603||973|
|Market Capitalization (In Rs ‘arba’)||22.03||9.74|
Source: Unaudited First Quarterly Report, FY 2077/78
Performance In Fiscal Year 2076/77
In the fiscal year 2076/77, Shikhar Insurance had collected Rs 352.17 crores in total premium and Rs 118.55 crores in net premium. Similarly, SICL earned Rs 45.02 crores as net profit. At the capital of Rs 137.45 crores, it has an Earnings Per Share (EPS) of Rs 32.75.
On the other hand, Sagarmatha Insurance has a total and net premium collection of Rs 219.48 crores and Rs 98.41 crores respectively. SIC has posted a net profit of Rs 35.82 crores in the fiscal year 2076/77. This translates into the EPS of Rs 35.78 on the capital of Rs 100.12 crores.
This is also presented in the table below:
|Headings||Shikhar Insurance||Sagarmatha Insurance|
|Paid-up Capital (Rs. ‘crores’)||137.45||100.12|
|Reserve & Surplus (Rs. ‘crores’)||83.63||51.86|
|Total Premium (Rs. ‘crores’)||352.17||219.48|
|Net Premium (Rs. ‘crores’)||118.55||98.41|
|Net Profit (Rs. ‘crores’)||45.02||35.82|
|Earnings Per Share (Rs.)||32.75||35.78|
Source: Unaudited Fourth Quarterly Report, FY 2076/77
Both the companies have shown a decent performance over the years. Shikhar Insurance is ahead of Sagarmatha Insurance in several indicators. However, from the investor’s view point, Sagarmatha Insurance seems relatively under-priced as compared to Shikhar. SIC has the market cap of Rs 9.74 Arba. While SICL has more than double market capitalization (Rs 22.03 Arba) as compared to SIC. Looking into fundamentals and the business volume, such difference in market value is not justified. In the first quarter of this fiscal year, Shikhar has 21 percent more premium collection than Sagarmatha Insurance. The net profit is more than double in the three months period. However, the profit of insurance companies differ largely in the annual report as compared to the quarterly report. In the previous fiscal year 2076/77, SICL earned a net profit of Rs 45.03 crores while SIC posted a net profit of Rs 35.82 crores. In terms of EPS, SIC is ahead of SICL with Rs 35.78 against Rs 32.75.
The above figures are based on the un-audited quarterly report published by the respective company. Investors are advised to take other things into consideration along with this report while making investment decisions. The numbers may vary after the final audit.
The share price, as well as the P/E ratio, is based on the data of Mangsir 3, 2077. At current, the numbers may vary.