1 LIC Share Price To Give Nearly 40% Returns Ahead; Motilal Oswal Recommends Buy For TP Of Rs 850

Life Insurance Corporation of India (LIC) has broadly witnessed a dull performance after its Q2 results. This was due to slide in its premium income during Q2FY24, however, LIC's margins improved. Brokerage Motilal Oswal has recommended buying LIC shares for a target price of Rs 850, which indicates nearly 40% upside on per share ahead. Also, Religare Broking has suggested to hold LIC shares.

LIC shares on Thursday gained nearly a per cent to touch an intraday high of Rs 610.85 apiece on BSE. The insurer's market cap is over Rs 3.85 lakh crore.

On the previous day, LIC shares stood at Rs 606.90 apiece.

In the H1 of FY24, LIC posted highest-ever half-yearly PAT stood at Rs 17,469 crore including an amount of Rs 13,768 crore (Net of Tax), pertaining to the accretions on the available solvency margin, transferred from Non - Par fund to shareholders account. LIC continued to be the market leader by market share in Indian life insurance business with overall market share of 58.50%. For six months ended September 30th, 2023, LIC had a market share of 40.35% in Individual business and 70.26% in the group business.

Other key highlights of the earnings are -- Non - Par APE increased by 19.77% to Rs.1,575 crore; Indian Embedded Value increased by 21.74% to Rs. 6.62 lakh crore; VNB Margin (Net) stands at 14.6%; AUM increased by 10.47% to Rs. 47.43 lakh crore; Improvement in 13th month persistency both on premium and policy basis; and lastly Solvency Ratio increased to 1.90 from 1.88.

Post Q2 results, brokerage Motilal Oswal said ,"LIC has levers in place to maintain its industry-leading position and ramp up growth in the highly profitable product segments (mainly Protection, Non-PAR, and Savings
Annuity). However, changing gears for such a vast organization requires a superior and well-thought out execution plan."

MS' note added, "We expect LIC to deliver a 3% CAGR (decline in FY24 and a sharp recovery in FY25) in APE over FY23-25, thus enabling a 9% VNB CAGR. However, we expect operating RoEV to remain modest at 10.5%, given its lower margin profile than private peers and a large EV base. LICI is trading at 0.6x FY24E EV, which appears reasonable, considering the gradual recovery in margin
and diversification in the business mix. We cut our VNB estimates to factor in the decline in VNB margins."

Nevertheless, MS' note lastly said, "we raise our EV estimates owing to better-thanexpected equity market returns. We reiterate our BUY rating with a TP of INR850
(0.7x Mar'25E EV)."

While in another research note, Religare Broking said, "LIC premium income continued to slide during the quarter
mainly led by decline in group insurance business while the individual business remained stable. There is a gradual shift in the product mix with an effort to make
the product mix more balanced. The margin continues to see improvement as the non-par component increases. We estimate APE/VNB to grow at 11.7%/25% CAGR of
FY23-25E and continue to maintain Hold on LIC with a target price of Rs 646 valuing the company at 0.6x of the FY25E embedded value."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.