Brokerages bullish on LIC post Q2 results; shares gain

Shares of Life Insurance Corporation gained 1.4 per cent on Monday as brokerages remained bullish on the stock despite a 4 per cent decline in y-o-y standalone net profit to ₹7,621 crore in the second quarter of FY25.

The State-owned insurer recorded 12 per cent growth in net premium income at ₹1,19,901 crore during the quarter under review.

Brokerages observed that the insurer recorded healthy operational performance, led by strong pre-sales before surrender norms kicked in October, and growth in new business premium driven by non-par savings.

Analysts of JM Financial have been positive on LIC’s ability to grow its non-par business, and strong EV returns, led by MTM gains - which has played out well.

They have maintained buy call on the stock at a target price of ₹1,300. “We wait for LIC’s strong agency channel to absorb the new norms before altering our near-term growth estimates, while the quarter adds confidence to our estimated VNB trajectory. Weak markets will counter the beat in EV in 1H25, hence, we do not materially change our FY25/FY26e number,” they added.

Maintaining its industry-leading position, LIC is aimed at ramping up growth in the highly profitable product segments, according to another domestic brokerage Motilal Oswal.

While some brokerage cautioned about the new surrender value regulations, Motilal analysts pointed out that the modified commission structure after the said regulations will be key for growth and profitability. New product launches, stronger banca and alternate channel presence, and digitisation will enable LIC to bridge the gap with private players, they added.

The brokerage has reiterated buy rating at a target price of ₹1,200 and said, “We have reduced our EV multiple factoring in higher sensitivity to equity market movements, weaker than expected performance in October 24 and impact of surrender charges.”

Motilal Oswal expects VNB margin to improve to 19 per cent by FY26.

ICICI Securities has upgraded the rating from add to buy at an unchanged target price of ₹1,193. The brokerage flagged the risk of EV sensitivity to market movement and a lower core RoEV profile on a high base. However, recovery in VNB margin and continued tailwinds in investment returns could lead to a positive surprise ahead, it said. 

Yes Securities upgraded the stock with buy rating at a revised target price of ₹1,150. Kotak Institutional Equities assigned buy call on LIC at a target price of ₹1,250. Bernstein has set a target price of ₹1190 on the stock.

LIC stock closed flat on the NSE at ₹920, after hitting the day’s high at ₹933.70.