The Q1 results of Life Insurance Corporation of India (LIC) slightly missed quarterly analyst estimates, primarily due to a decline in key segments like Par (participating) and Group, while the non-Par (non-participating) segment managed to grow on a year-on-year (YoY) basis. Here are some key points from the report:
- Segment Performance: The Par and Group segments experienced a YoY decline, impacting the overall Q1 results. On the other hand, the non-Par segment managed to achieve YoY growth.
- APE Growth and Expectations: Annualized Premium Equivalent (APE) growth was reported as soft, but analysts expect it to pick up pace in the future.
- Valuations and Potential: Analysts find the valuations of LIC to be inexpensive and foresee the potential for the stock to deliver significant returns over the next 12 months.
- Downgrade and Target Price: YES Securities downgraded the stock from ‘Buy’ to ‘Hold’. Despite the downgrade, their target price of Rs 775 suggests a potential upside of 15%.
- Stock Potential: Various analysts believe that LIC’s stock has the potential to deliver returns ranging from 15% to 43% over the next 12 months.
Life Insurance Corporation of India (LIC) reported a significant increase in its first-quarter profit, driven by a strategic move to allocate funds to a shareholders’ fund. Here are the key details from the report:
- Profit Surge: LIC’s profit after tax for the quarter ended June 30 surged to Rs 9,544 crore. This represents a near fourteen-fold increase compared to the profit of Rs 683 crore reported in the same quarter the previous year.
- Strategic Allocation: The substantial increase in profit can be attributed to a strategic decision to move funds to a shareholders’ fund. This allocation likely contributed to shoring up LIC’s bottom-line.
- Quarterly Performance: The reported profit for the first quarter of the fiscal year indicates a strong financial performance during this period.
Analysts from different brokerages have provided their insights on the valuation and potential rerating of Life Insurance Corporation of India (LIC) stock:
- Valuation and Rerating Expectations: One brokerage highlighted that LIC’s valuation at 0.5 times FY25 Embedded Value (EV) is considered undemanding. They anticipate that LIC could experience a rerating in the future, which implies an increase in the stock’s valuation relative to its fundamentals.
- Target Price and Upside Potential: The mentioned brokerage has set a target price of Rs 940 on LIC’s stock, suggesting potential upside from its current levels. This target price indicates the brokerage’s optimistic outlook for the stock’s performance.
- ICICI Securities’ Perspective: ICICI Securities, while acknowledging the sensitivity of LIC’s EV to market movements, believes that the current valuation multiple adequately captures this risk. They have set a target price of Rs 917 on the stock, which reflects their assessment of its potential.
