Brokerage firms remain optimistic about Life Insurance Corporation of India Ltd (LIC) shares, projecting up to a 42 percent increase following its quarterly earnings. Analysts note that while LIC’s overall performance met expectations, the key driver was the growth in the value of new business (VNB), despite a muted topline.
Ashika Institutional Equity Research highlighted a 4 percent rise in VNB, outperforming listed insurance peers. “The VNB margin increased to 16.8 percent net. With robust growth in non-par products and no one-time sales base effect in 4QFY23, we anticipate even stronger VNB growth in FY25,” Ashika stated, setting a target price of ₹1,430, indicating a 43 percent upside.
On Wednesday, LIC shares dropped over 1.55 percent to ₹1,005, bringing its market capitalization below ₹6.5 lakh crore. Previously, the stock closed at ₹1,021.40 on Monday and is down about 15 percent from its all-time high of ₹1,175 on February 9, 2024.
Kotak Institutional Equities noted a 25 percent EV growth for the year, in line with estimates, but pointed out that VNB margins were affected by higher IRRs and changes in interest rate assumptions. Despite this, the non-par segment performed well. Kotak maintained a ‘buy’ rating with a fair value of ₹1,300, stating, “Stock performance remains leveraged to capital market rallies.”
LIC’s 4QFY24 PAT grew 2.5 percent, and net premium grew 15.6 percent YoY. However, Motilal Oswal reported a drop in market share to 58.9 percent in FY24 from 62.6 percent in FY23. The net VNB was flat YoY, causing the net VNB margin to contract to 17.2 percent in 4QFY24. Motilal Oswal reiterated a ‘buy’ rating with a target price of ₹1,270, expecting VNB margin improvement with the growth of the non-Par segment.
JM Financial projects LIC’s total APE to grow by an 11 percent CAGR over FY24-FY26, driven by the non-par segment, with margins expected to expand to 19.7 percent by FY26. They maintain a ‘buy’ rating with a target price of ₹1,222, valuing the standalone entity at 0.8 times FY26e EV.
LIC shares were listed in May 2021, following the largest IPO in Indian market history, raising over ₹20,550 crore. The stock, initially sold at ₹949 per share, is now up merely 6 percent from its IPO price.