Shares of Life Insurance Corporation of India Ltd (LIC) have taken the spotlight as the life insurer revealed a 17 percent increase in net profit, reaching a substantial Rs 11,057 crore for the December quarter. This news has sparked a wave of interest among investors and experts alike, prompting discussions on whether now is the right time to buy, hold, or sell LIC shares post Q3.
Brokerages have weighed in on the matter, noting that LIC has shown a commendable margin profile for the quarter despite the challenges posed by the new surrender regulations. One key highlight is the VNB margin, which stood at an impressive 19.4 percent, largely attributed to the increased Non-Par mix. On the flip side, APE growth has faced a setback, with a 24 percent decline in Q3FY25.
Brokerages Optimistic About LIC Post Q3 Results
Despite the hurdles faced by LIC in the recent quarter, brokerages remain optimistic about the future prospects of the company. They have set target prices that suggest a potential upside of up to 33 percent, indicating a favorable outlook for investors.
Emkay Global has noted that LIC’s management has taken proactive steps to counter the impact of the new surrender regulations. By restructuring product and commission structures and revising the minimum ticket size of policies, LIC aims to improve persistency and drive growth in Non-Par products through innovative launches.
Looking ahead, Emkay Global anticipates a rebound in growth driven by an increase in the number of policies sold and in ticket size. To reflect the Q3 performance, the brokerage has adjusted its estimates, resulting in a 7-12 percent increase in VNB estimates for FY25-27. While maintaining an ‘ADD’ rating, Emkay Global has revised down its Dec-25E target to Rs 1,100 from Rs 1,150, signaling a 4.3 percent cut.
Strategic Moves by LIC to Sustain Growth Trajectory
Meanwhile, MOFSL has highlighted LIC’s steadfast position in the industry and its strategic initiatives to bolster overall growth. By diversifying its product offerings, shifting towards non-par products, strengthening its agency channel, and embracing digitization, LIC aims to stay ahead of the curve in a competitive market landscape.
To adapt to the changing regulatory environment, LIC has realigned distributor incentives to absorb the impact of surrender charges. Additionally, the introduction of a new hedging mechanism instills confidence in the company’s ability to navigate uncertainties around VNB, ensuring that product-level margins remain robust.
MOFSL has adjusted its net premium, APE, and VNB margin estimates by 4 percent each for FY25 in light of the 3QFY25 performance. With a higher share of the non-par segment, the brokerage foresees an improvement in VNB margin. Given these factors, MOFSL recommends a ‘Buy’ rating with a target price of Rs 1,085, underscoring the growth potential of LIC shares.
In conclusion, the recent developments in LIC’s financial performance have sparked a flurry of discussions among investors and experts alike. While challenges persist, strategic measures taken by the company’s management to navigate uncertainties and drive growth have garnered positive attention from brokerages. As investors weigh their options, it is imperative to consider expert insights and consult with a qualified financial advisor to make well-informed investment decisions that align with individual financial goals.
