Shares of Life Insurance Corporation of India (LIC) jumped nearly 9 per cent on Wednesday as its net profit soared 38 per cent in the quarter ended March 2025.
The State-owned insurer posted a 38 per cent y-o-y increase in net profit to ₹19,013 crore in the quarter under review on lower expenses and an increase in investment income.
In FY25, its net profit increased 18 per cent to ₹48,151 crore as against ₹40,676 crore in FY25.
Recently, a report by Allianze Global Insurance revealed that life insurance market in the country will grow at 10.5 per cent against a global average of 5 per cent over the next ten years.
The anticipation of growth is due to growing economic activity and policies that promote insurance.
Brokerages have been bullish on the stock due to improving margins and valuations. Global brokerage Macquarie assigned an outperform rating on the stock at a target price of ₹1,215, while Goldman Sachs has a neutral rating at ₹880 per share.
Domestic brokerage Motilal Oswal reiterated buy at a target price of ₹1,050. Motilal believes that LIC holds industry-leading position, focused on achieving growth recovery through wider product offerings, higher ticket size, a shift in the product mix toward non-par, agency channel expansion, and a higher contribution from bancassurance and alternate channels.
The domestic brokerage observed that the value of new business (VNB) margin expanded to 18.7 per cent y-o-y in Q4FY25 from ₹17.2 per cent, but lower than its expectation of 20.1 per cent. For FY25. it expanded 80 bp to ₹17.6 per cent y-o-y.
However, it has slashed VNB margin estimates by 50 bps for FY26 and FY27, factoring in FY25 performance.
Motilal believes improvement in rider attachment, along with an increase in contribution from higher margin products, will boost VNB margin.
Macquarie also mirrored caution around VNB growth, but emphasised that valuation provides a cushion.
The stock traded 7.46 per cent higher at ₹936.05 on the BSE as at 10.36 am, after hitting a high of ₹948.
Published on May 28, 2025