Shares of LIC traded at ₹999 on the NSE, up by 0.07 per cent as of 10.25 am on Thursday. Brokerages have been bullish on the stock driven by strong equity and change in product mix. They expect stock to rise at least 20 per cent.
The company reported a 2 per cent marginal increase in net profit at ₹13,763 crore in the fourth quarter ended March 2024, against ₹13,428 crore in the corresponding quarter last year.
Emkay Global has reiterated ‘add’ call on the stock with an unchanged June-25E target price of ₹1,200/sh, implying FY26E P/EV of 0.8x. The brokerage added that LIC reported an inline set of numbers, delivering 16.8 per cent VNB margin for FY24 against the estimate of 16.9 per cent, and largely inline APE at ₹57,000 crore.
Emkay added that the corporation’s strategy towards increasing share of non-par products tracked well, driven by launch of new products. However, PAT at ₹40,680 crore came in 7 per cent above the brokerage’s estimates, driven by a number of one-off adjustments on account of income tax refunds and revision in pension liabilities. “To bake-in the Q4FY24 developments, we increase our VNB margin estimate by 0.1-0.2ppt and APE estimates by 2-4 per cent which results in 4-5 per cent growth in FY25E-26E VNB. Our EV estimates have increased by 6-7 per cent on account of MTM gains during FY24,” it said.
Analysts of Motilal Oswal stated that LIC is further strengthening its presence in tier 2-3 towns through the agency transformation project. They added that the corporation is contemplating a foray into the health insurance sector and should be assessing the potential acquisition prospects.
The brokerage said that LIC levers to maintain its industry-leading position and ramp-up growth in the highly profitable product segments (mainly protection, non-PAR, and savings annuity). “We expect LIC to deliver a 11 per cent CAGR in APE over FY24-26, thus enabling a 18 per cent VNB CAGR. However, we expect operating RoEV to remain modest at 11.5 per cent in FY26, given its lower margin profile than private peers and a large EV base.”
Reiterating ‘buy’ rating with a target price of ₹1,270 on the stock, Motilal’s report stated, “We retain our VNB estimates for FY25/FY26. With the growth in the share of non-par segment, we expect the VNB margin to improve (19 per cent by FY26).”
Brokerage JM Financial has maintained its ‘buy’ call on the stock at an unchanged target price of ₹1,222. It mentioned that growth in non-par segment was a positive surprise. “We estimate LIC to grow its total APE by c.11% CAGR over FY24-FY26, led by growth in non-par segment. With this, margins should expand to 19.7% by FY26,” it said.
Kotak Securities has a ‘buy’ rating with a target price of ₹1,300 on LIC.
Analysts of Religare noted that LIC recorded healthy growth in premium income driven by single premium and renewal premium while first-year premium remained muted. They also observed the decline in margins due to a higher growth of group products compared to individual business.
The brokerage has changed the rating on the stock from ‘accumulate’ to ‘buy’, with a target price of ₹1,232 valuing the company at 1.1x of its FY26E EV.
Global brokerage JP Morgan has upheld its overweight call on the stock at a target price of ₹1,340.
Citi has maintained its buy rating on LIC and has lowered the target price to ₹1,255 from 1,295.
Meanwhile, Goldman Sachs has maintained a ‘neutral’ call at a target price of ₹950.