LIC shares: Check latest target prices for the stock after Q4 results

Brokerage firms continue to remain positive on shares of Life Insurance Corporation of India Ltd (LIC) and see up to 42 per cent in the stock after its quarterly earnings. Analysts tracking the stock believe that the company's numbers were in-line to the expectations but value of new business (NVB) stood as the major trigger for the counter, despite a muted topline.

VNB increased by 4 per cent, which is better than the listed insurance peers, said Ashika Institutional Equity Research. "VNB margin, on a net basis, increased to 16.8 per cent. With robust growth in non-par products and no one-time sales base effect in 4QFY23, we expect even stronger VNB growth in FY25," it said.

"Looking ahead, we expect the company’s VNB margin to witness continued improvement in FY25E, aided by higher contribution of non-par products. Net Premium Income increased by 16 per cent, owing to sharp rise in single premium and first year premium," Ashika added with a target price of Rs 1,430 on the stock, suggesting an upside of 43 per cent in the stock.

Shares of LIC dropped more than 1.55 per cent to Rs 1005 on Wednesday, with its total market capitalization slipping below Rs 6.5 lakh crore mark. The stock had settled at Rs 1,021.40 in the previous trading session on Monday. The stock is down about 15 per cent from its all-time highs of Rs 1,175, hit on February 09, 2024.

LIC reported 25 per cent EV growth for the year, in line with estimates. VNB margins were marred by higher IRRs and change in interest rate assumptions, even as the non-par story is playing out nicely, said Kotak Institutional Equities. "While core VNB inches up, stock performance remains leveraged to rally in the capital market," it said with a 'buy' with a fair value of Rs 1,300.

LIC’s 4QFY24 PAT grew 2.5 per cent, while Net premium grew 15.6 per cent YoY. Market share in premium dropped to 58.9 per cent in FY24 from 62.6% in FY23, said Motilal Oswal. Net VNB was flat YoY and thus net VNB margin contracted to 17.2 per cent in 4QFY24, it added.

Shares of LIC were listed at the bourses in May 2021, when the Government of India launched the largest IPO in the history of Indian markets and raised more than Rs 20,550 crore. The stock was sold at Rs 949 apiece and the stock is merely 6 per cent up from its IPO price.

"We retain our VNB estimates for FY25/FY26. With the growth in the share of the non-Par segment, we expect the VNB margin to improve," it added, reiterating its 'buy' rating on the stock with a target price of Rs 1,270 on the stock.

Topline growth would be led by its strong agency channel and should be aided by repricing of employee liabilities in its group segment, where it had a dominant market share of 72.5 per cent in FY24, said JM Financial. "We estimate LIC to grow its total APE by 11 per cent CAGR over FY24-FY26, led by growth in the non-par segment," it said.

With this, margins should expand to 19.7 per cent by FY26, added JM Financial. "For valuation, we apply 15 per cent holding company discount to IDBI Bank and LIC Housing Finance’s current market cap, and value the standalone entity at 0.8 times FY26e EV," it added maintaining 'buy' rating with a target price of Rs 1,222 on the stock

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