LIC share price jumped more than 2% on Thursday to hit an intraday high of Rs 615 on NSE. The rise comes after the insurer posted over five-fold jump in Q4FY23 profit, as it moved nearly Rs 7,300 crore to a shareholders' fund to shore up its bottom line.
LIC on Wednesday posted a profit after tax (PAT) of Rs 13,428 crore for the quarter ended March 31, 2023, as compared to Rs 2,372 crore a year ago.
While the profit jumped 447%, the total income of the LIC during the March quarter declined to Rs 2,01,022 crore from Rs 2,15,487 crore in the same period of the previous fiscal.
The five-fold jump in LIC's profit in Q4FY23 numbers was mainly due to accretion on the available solvency margin due to which funds were transferred from non-par funds to shareholder's account. The more realistic and sustainable metric to observe is value of new business (VNB), which saw a growth of 16.46% in FY23, according to Akshay Tiwari, Fundamental Analyst, Religare Broking.
LIC share price has jumped over 6% in the last 5 sessions. The stock has rallied around 10% in the last month. However, in year-to-date time, LIC shares are still down 14%; and more than 25% down in the last year.
In terms of technicals, the relative strength index (RSI) of LIC stands at 75, signalling that stock is overbought. Its one-year beta is 0.8, implying low volatility in share price. The stock is trading higher than its 5-day, 10-day, 20-day, 30-day and 50-day and 100-day moving averages.
LIC share price is down 28.17% from 52-week high of 841.4. The stock touched 52-week low on March 29, 2023, and 52-week high on May 30, 2022.
"We remain optimistic on the Life Insurance space and investors looking to take exposure in this sector can consider buying LIC from a long-term perspective with a time horizon of 9-12 months. LIC is available at an attractive valuation of ~0.7x of its P/EV (Embedded value) and we have a target price of Rs 646," said Akshay Tiwari, Fundamental Analyst, Religare Broking.
Since its inception, LIC stock has been in a downtrend trend forming a series of lower tops and bottoms formation. However, since Oct '22, although the prices are forming lower lows, the strength indicator RSI is rising, indicating the increasing strength or accumulation around all-time lows, according to Rajesh Palviya, SVP - Technical and Derivatives, Axis Securities.
"The recent price rise is backed by strong volumes, which reconfirm increased participation. The short-term moving averages (20 and 50-day SMA) positive crossover support bullish trends on the short-term charts. We advise investors to accumulate LIC stock in a staggered manner with a 565 stop loss. On the upside, the stock may extend its rally towards 665-720 levels in the upcoming months," Rajesh Palviya, SVP - Technical and Derivatives, Axis Securities, said.
The recovery in Adani group stocks in the past couple of sessions has boosted the value of LIC's holding in the Gautam Adani-led conglomerate's companies. The market value of LIC's holding in Adani Group companies has seen significant appreciation in less than 2 months.
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