LIC Stock Soars 9% After Mixed Q4 Results: Should You Buy, Sell, or Hold?
Shares of LIC jumped 9% to Rs 948 per share on May 28th following the release of its financial results for the March quarter (Q4FY25). While the results were mixed, with a dip in premiums but a strong profit growth, most brokerages remained bullish on the stock, pointing to improving margins and attractive valuations as key growth drivers.
Analysts Weigh In
Analysts at Motilal Oswal maintained a "buy" rating on LIC, setting a target price of Rs 1,050 per share. They highlighted the positive impact of a higher contribution from non-participating (non-par) policies on LIC’s Value of New Business (VNB) margin in Q4. The management also expressed optimism about a rebound in premium growth.
Macquarie echoed this positive sentiment, maintaining an "outperform" rating with a target price of Rs 1,215 per share. They acknowledged concerns around VNB growth but argued that the valuation offers a safety net. "An increasing mix of non-par products and improving cost efficiencies should help sustain margin improvement," they noted.
On the other hand, Goldman Sachs took a more cautious stance, maintaining a "neutral" rating with a lower target price of Rs 880 per share. Their conservatism stems from LIC’s revenue miss, particularly in its individual participating and group insurance segments, which declined by 16% year-on-year. The agency channel also faced headwinds following the introduction of new products in October.
LIC’s Q4 Performance
Despite the mixed results, LIC’s net profit surged 38% year-on-year to Rs 19,013 crore in Q4. However, net premium income slipped 3% year-on-year to Rs 1.4 lakh crore. A positive note was the improvement in LIC’s gross non-performing assets (NPAs), which dropped 55 basis points to 1.46% during the quarter.
LIC attributed its flat Annualized Premium Equivalent (APE) growth in FY25 to changes in product regulations, stating that agents needed time to understand the new guidelines. The company also mentioned redesigning and refiling many products, which impacted sales momentum. Additionally, the sale of a higher share of single-premium policies during the year negatively affected APE growth.
Looking Ahead
For FY26, LIC plans to focus on weighted risk premium and APE, anticipating double-digit growth in both metrics. The management also highlighted margin improvements in FY25, including Q4, and projects a 2 to 3% increase in VNB margin in FY26, aiming for around 20% for the year.
