Shares of Life Insurance Corporation of India Ltd (LIC) will be in focus on Monday morning after the life insurer in a brief filing said it received refund orders for Assessment Years FY13, FY14, FY15, FY17, FY18, FY19 and FY20. The total amount of refund was Rs 25,464.46 crore, LIC said, adding that income tax department released Rs 21,740.77 crore on February 15 and that the corporation was pursuing for the balance with the income tax department.
'Life Insurance Corporation of India had received refund orders for Assessment Years 2012- 13, 2013-14, 2014-15, 2016-17, 2017-18, 2018-19 and 2019-20. The total amount of refund was Rs.25,464.46 Crore. In this regard Income tax Department has released Rs. 21,740.77 crore on 15.02.2024. The Corporation is pursuing for the balance with the Income Tax Department," it said in a BSE filing.
LIC recently came out with its December quarter results, wherein its management expects annual premium equivalent (APE) growth to improve, led by product launches across categories.
For the quarter, LIC's VNB margin expanded over 400 basis points on sequential basis. The key reason for the sequential expansion in margin was the rise in the share of Non-Par, which in turn was driven by the Jeevan Ustav, which is a whole life product with long policy term.
"As a result, the Non-Par savings’ average policy term has jumped from 16 years to 43 years. The margin expansion is despite revisions in annuity pricing, which were effected to aid APE growth and which, among other benefit changes, have led to an erosion of 360 bps in VNB margin on YoY basis, for the 9-month period. The management has stated that LIC is in line with what they had committed at the time of listing and would continue their effort, which would lead to further improvement in margin," YES Securities noted.
ICICI Securities said it has always believed that product mix driven possible rise in VNB margin is achievable for LIC and is underappreciated by the market. This along with strong capital markets made erstwhile deep discounted valuations unwarranted, it said.
"However, post 78 per cent return over the last three months, valuations are now closer to EV (trading 0.9 times FY25E EV now versus 0.5 times FY25E EV. Downgrade to ADD," it said.
LIC's said focus on digital initiatives may drive customer acquisition and customer servicing, Emkay Global said in a note.
"To bake-in the Q3FY24 developments, we increase our VNB margin estimate by 1 percentage points and of APE by 3 per cent, which results in 9-11 per cent growth in FY24E-26E VNB. After the stellar run-up in the stock price post our upgrade (57 per cent outperformance vs NIFTY), we take a breather and move to 'ADD' rating from 'Buy’, with our revised Dec-24E target of Rs 1,200/share (from Rs 975 earlier), implying Dec-25E P/EV of 0.9 times," Emkay Global said.
VNB stands for value of new business.
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