The insurer reported very strong value of new business (VNB) growth and its margin witnessed a big jump, which was led by a favourable product mix.
Its VNB increased 61% to ₹3,136 crore from ₹1,944 crore in the first quarter last fiscal and surpassed the CNBC-TV18 poll of ₹2,638 crore. Its VNB margin expanded by 750 basis points to 22.9% from 15.4% in the year-ago period and also from Street estimates of 17.8%.
The non-participating share of individual is now at 32.5% from 30.34%.
However, LIC’s new business premium increased 10% to ₹66,185 crore from ₹60,262 crore in the previous year, and turned out to be below estimates of ₹65,549 crore.
Its total annual premium equivalent (APE) was up 8% at ₹13,692 crore from 12,652 crore last year but missed the CNBC-TV18 poll projection of ₹14,841 crore. Its retail APE increased 7% to ₹7,532 crore from ₹7,061 crore in the previous fiscal but was again below street expectations of ₹8,214 crore.
What Are The Brokerages Saying?
84% of the 25 analysts who cover LIC have a “buy” rating on the stock. Three of them have a “hold” rating and one has a “sell” recommendation.
After its first quarter results, Jefferies has increased its price target on the stock, while Goldman Sachs chose to remain on the sidelines.
Jefferies has a “buy” rating on the stock and has raised its price target to ₹530 per share from ₹480 apiece. This indicates an upside of 36.8% from its previous closing price of ₹387.5.
It said LIC has closed its margin gap with peers to 200 to 300 basis points in the June quarter. The India APE growth of 7% from last year on a low-base was a disappointment, it added.
The brokerage has raised its financial year 2028-2029 VNB estimates for LIC by 5% to 6% to factor in the higher margins.
It added that LIC trades at 0.5 times its FY27 estimated enterprise value (EV), despite the VNB growth gap narrowing, estimated at 16% from FY26-29 compared to 16% of its peers as well.
Goldman Sachs has a “neutral” rating on LIC with a target of ₹475 per share, an upside of 22.6% from its previous close.
LIC’s value-accretive non-PAR savings/protection, positive rate-related assumptions impact was partially offset by higher expenses / GST.
It said LIC’s agent count declined 3% to 1.45 million, with the management attributing this largely to attrition among the Bima Sakhi recruiters who existed after realizing the role required active selling rather than only a stipendiary position. LIC also highlighted the continued weeding out of non-serious agents, stronger rural taction and efforts to rebuild/retain urban agency numbers.
It said the management attributed margin expansion primarily to business mix, led by non-par savings/protection and higher ticket-size products, with assumption changes contributing 290 basis points. It added that expense assumptions, including GST input tax credit loss, were estimated to be around a 190 basis points drag.
It attributed ULIP weakness to market volatility, with the management expecting recovery as markets normalized, while bancassurance was impacted by delayed partner plans, lower annuity/ULIP traction and West Asia-related remittance disruption.
LIC expects margins to improve further from the first quarter base, subject to risk-free rate (RFR) movements, with continued focus on value-accretive lines and operating efficiency, Goldman Sachs added. The stock is also in the F&O ban, which means no new derivate positions can be created.
Stock reaction
Of the 24 analysts who have coverage on the stock, 21 have a “buy” rating, three have a “hold” rating and one has a “sell” rating.
LIC shares gained 2.4% to hit an intraday high of ₹396.85 apiece on Friday. The stock was trading 1% up at ₹391.55 apiece at 10 am. It has declined 10% in the past month.
Also Read: Explained – Why are Bajaj Finance shares down 4% on Friday
