Analysts find LIC’s prevailing valuations as undemanding and see up to 57 per cent upside on the stock over the prevailing share price.
Life Insurance Corporation of India (LIC) Share Price: The shares of LIC on Friday Morning were trading higher post the insurance behemoth’s strong performance in the March quarter earnings earlier this week. The scrip has been performing well in the past month and has given over 10 per cent returns to its investors.
However, The year so far has been bad for the stock as it is down about 12 per cent year-to-date. The stock hit its 52-week high of Rs 841 on May 30, 2022, and a 52-week low of Rs 530.20 on March 29, 2023.
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LIC Q4 Earnigs
The company on May 24 reported a 447.47 per cent or 5.5 folds year-on-year rise in consolidated Q4 FY23 PAT at Rs 13,190.79 crore. In the previous fiscal’s Q4, the PAT stood at Rs 2,409.39 crore.
Consolidated net premium income, on the other hand, fell 8.27 per cent to Rs 1,32,223.21 crore in Q4FY23 from Rs 1,44,158.84 crore in Q4 of the previous fiscal.
Besides, LIC’s board of directors recommended a dividend of Rs 3 per equity share for FY23.
What Should Investors Do Now?
Analysts find LIC’s prevailing valuations as undemanding and see up to 57 per cent upside on the stock over the prevailing share price.
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JM Financial said the current valuation of LIC at 0.5 times FY25E EV is undemanding and expects the stock to rerate on the back of strengths such as large customer base (27.80 crore in-force individual policies), huge agency network (accounted for 51.3 per cent of total industry agents as of March), strong brand equity and, importantly, the sovereign guarantee (on sum assured and bonuses) attached to LIC policies. Post LIC’s March quarter results, JM Financial has retained its ‘Buy’ rating on the stock with a target of Rs 940.
LIC, Motilal Oswal Securities said, has the levers in place to maintain the industry-leading position and ramp up growth in the highly profitable product segments mainly protection, non-participating, and savings annuity.
That said changing gears for such a vast organisation requires a superior and well-thought out execution, Motilal Oswal said, as it expects LIC to deliver a 15 per cent growth in annualised premium equivalent (APE) compounded annually over FY23-25, thus enabling a 27 per cent VNB (value of new business) CAGR.
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The brokerage target of Rs 830 on LIC suggests 37.5 per cent potential upside for the stock over Thursday’s closing price of Rs 603.60.
Foreign brokerage Macquarie has a target of Rs 850 on LIC. Goldman Sachs, meanwhile, has a target of Rs 690 for the stock.
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