Shares of Life Insurance Corporation of India (LIC) hogged the spotlight during the trading session on Monday after the state-run insurance major reported a decent set of numbers in the September 2024 quarter. Brokerage continues to remain positive on the stock on both technical and fundamental parameters.
Domestic brokerage firms including JM Financial, YES Securities, Emkay Financial and Motilal Oswal see up 42 per cent upside in the insurance behemoth, while Choice Broking see some smart gains based on the technical parameters in the counter in the next few sessions. Bernstein is also positive on the stock.
LIC of India reported a 4 per cent YoY decline in its standalone net profit at Rs 7,621 crore for the quarter ended September 2024. Its net premium income during the reporting quarter increased 11 per cent YoY to Rs 1.19 lakh crore, said the company in an exchange filing. Assets under management (AUM) rose 17 per cent YoY to Rs 55.39 lakh crore as of September 2024.
Income from investments during the second quarter rose 16 per cent YoY to Rs 1.08 lakh crore in the September quarter, while the first-year premium income during the second quarter increased 12 per cent YoY to Rs 11,201 crore. A total of 91.70 lakh policies were sold in the individual segment during the first half.
LIC maintains its industry-leading position and is focusing on ramping up growth in the highly profitable product segments. New product launches, stronger banca & alternate channel presence, and digitization will enable LIC to bridge the gap with private players, said Motilal Oswal Financial Services, which has a 'buy' rating on the stock.
"We have raised our premium growth and VNB margin estimates for FY25/FY26, factoring in 2QFY25 performance. We expect LIC to deliver a 10 per cent CAGR in APE over FY24-27. We have reduced our EV multiple factoring in higher sensitivity to equity market movements, weaker than expected performance and impact of surrender charges, "it said with a target price of Rs 1,200.
LIC put up a strong show in Q2FY25 that led to an overall impressive performance in H1FY25. Robust growth in the Individual Non-par segment in Q2 and sustained growth momentum in the group business saw LIC reporting a total APE of Rs 28,000 crore, said Emkay Global.
"Management is confident of continuing the strong performance in the new surrender regulations era as well, but we see challenges for LIC in terms of balancing policyholders' return, distributors' payout, and VNB margins for shareholders. We maintain an 'add' rating with a target price of Rs 1,150," it said.
Share of LIC rose more than 2 per cent to Rs 933.30 on Monday, with its total market capitalization rising above Rs 5.9 lakh crore mark. The stock had settled at Rs 914.75 in the previous trading session. However, it has corrected nearly 25 per cent from its 52-week high at Rs 1,221.50 hit in January 2024.
YES Securities said that growth and margin show improved traction. "We value LIC at 0.7 times FY26 P/EV for an FY25E, 26E and 27E RoEV profile of 11.5 per cent, 11.6 per cent and 11.7 per cent, respectively," it said upgrading LIC to 'buy' with a target price of Rs 1,150. However, YES Securities prefers Max Financial Services and SBI Life Insurance in the insurance space.
Bernstein said that Q2FY25 numbers showed a strong growth with improvement in product level margins. Higher mix of non-par in the new business drive margin improvements. "We expect continued mix shift towards non-par saving to drive higher margins," it said with a market-perform rating with a target price of Rs 1,190.
LIC stock has been flattish since June, after a strong performance in early-FY24, said JM Financial. We believe growth in individual business will be sluggish as new norms are absorbed in 3Q, while group business growth normalises. "However, valuations FY26e EV are undemanding. We wait for LIC’s strong channel to absorb the new norms before altering our near term growth estimates."
"Weak markets will counter the beat in EV in 1H25, hence, we do not materially change our FY25 and FY26e numbers. We continue to value the insurer at 0.9 times FY26e EV of Rs 9,21,000 crore to maintain our target price of Rs 1,300," JM added with a 'buy' rating on the stock.
On a Technical basis, LICI has broken out of a downward trend line on the daily chart, indicating a shift in momentum. The recent price reversals accompanied by increased trading volumes suggest robust buying interest. This upward movement signals potential for continued gains, setting a target price of Rs 1,052.10, said Choice Broking.
"To manage risk effectively, a stop-loss at Rs 888 is recommended to safeguard against unexpected reversals. Buying opportunities around Rs 920 may optimize the reward-to-risk balance. LICI presents a compelling buying opportunity with a target price of Rs 1,052.10, supported by favorable technical indicators and prudent risk management," Choice said.