LIC rallies 9% on multifold jump in Q2 profit, adds over Rs 26,500 crore to its m-cap

Shares of Life Insurance Corporation (LIC) climbed 9 per cent in Monday's trade after the life insurer reported a multi-fold jump in the September quarter profit, thanks to changes in its accounting policy.

The largest insurance company reported a net profit of Rs 15,952 crore for the quarter compared with Rs 1,433 crore in the same period last year. The insurance giant recorded a net profit of Rs 682.90 crore in the June quarter. 

LIC said its first-year premium stood at Rs 9,124.7 crore for the September quarter compared with Rs 8,198.30 crore a year ago. Net premium income came in at Rs 1.32 lakh crore for the quarter compared with Rs 1.04 lakh crore in the year-ago period. Meanwhile, LIC’s renewal premium rose 2 per cent to Rs 56,156 crore while single premium increased 62 per cent to Rs 66,901 crore.

Following the development, the stock surged 8.70 per cent to hit a high of Rs 682.70 on BSE. By 9.30 am, LIC was commanding a market capitalisation (m-cap) of  Rs 4,23,774.85 crore, up Rs 26,533 crore over Friday's m-cap of Rs 3,97,241.48 crore. 

ICICI Securities on November 11 initiated coverage on LIC with a buy rating and target price of Rs917.

ICICI Securities values the stock at 15 times FY24E VNB of Rs 9,800 crore and 0.7 times FY24E EV of Rs 6.2 lakh crore.

"We have factored an impact of Rs 40,000 crore (FY23+24) to factor 10 per cent correction in equity market while our discounted EV multiple adequately factors any further risk from the high equity market sensitivity of the surplus book," it said.

"The multiple of 0.7x to EV is equivalent to almost 50 per cent market share correction based on current sensitivity of EV to equity market movements. Even at this multiple, resultant upside at CMP is 48 per cent, implying attractive valuation of the stock," it added.

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