Does LIC’s multifold leap in This autumn revenue make it a purchase? What brokerages say

May 26, 2023 | blog

After Life Insurance Corporation of India (LIC) posted a standalone web revenue of Rs 13,428 crore in This autumn FY23 on Wednesday, quite a few prime brokerages retained their bullish views on the inventory.

While Motilal Oswal maintained a ‘Buy’ score on the inventory, Emkay really helpful a ‘Hold’. Meanwhile, Axis Capital and JM Financial additionally maintained ‘Buy’ calls on the counter.

Insurance behemoth LIC on Wednesday reported a standalone web revenue of Rs 13,428 crore for the quarter led to March. The revenue grew 466% from Rs 2,371 crore in the identical quarter of final yr.

However, its web premium revenue fell 8% to Rs 1.31 lakh crore in the course of the March quarter, in contrast with Rs 1.43 lakh crore within the corresponding quarter of the earlier yr.

LIC’s first-year premium in the course of the reporting quarter stood at Rs 12,811 crore, down 12% from Rs 14,614 crore within the year-ago quarter. Income from investments rose marginally to Rs 67,846 crore for the January-March interval versus Rs 67,498 crore in the identical interval final yr.

Net fee in the course of the quarter rose 5% to Rs 8,428 crore. The similar stood at Rs 7,996 crore within the earlier yr’s interval. For the complete yr, the insurer’s revenue declined 10% to Rs 36,397 crore as in opposition to Rs 40,431 crore reported in fiscal 2022.

At 11.04 am, LIC shares have been buying and selling 0.5% larger at Rs 607 on BSE.Should you purchase, promote or maintain LIC’s inventory? Here’s what analysts say:

JM Financial
Brokerage JM Financial maintained a Buy score on LIC with a goal value of Rs 940, which reveals an upside potential of 55% from the present market value of Rs 607.

“We expect growth to be strong going ahead, aided by a large customer base, huge agency network, strong brand equity and importantly, the sovereign guarantee (on sum assured and bonuses) attached to LIC policies; these advantages, along with strong expected tailwinds for the sector, should drive LIC’s overall APE growth to 10-11% over FY24-25E,” it stated.

Axis Capital
Domestic brokerage Axis Capital reiterated its Buy score on LIC with a goal value of Rs 720, which reveals an upside of 19% from the present market value.

“FY23 APE growth of 12.5% remains steady, however, NPAR grew robust (36% YoY) and contributed ~9% of APE in FY23. VNB grew well and VNB Margin expanded to 16.2%. The focus remains on profitable growth driven by the NPAR, annuity and group businesses. We marginally adjust APE estimates on lower growth, offset by better VNB margins, maintain TP at Rs 720 (0.7x Sep’24E P/EV), and reiterate BUY on inexpensive valuation,” it stated.

Emkay reiterated its Hold score on LIC with a goal value of Rs 660, which reveals an upside of 9% from the present market costs.

“LIC reported APE growth of 12.5% YoY to Rs 567 billion and VNB growth of 20.7% YoY to Rs 92 billion for FY23, coming in ~3% below our estimates. Factoring in the Q4/FY23 developments, we have tweaked our FY24-25 estimates and introduced FY26 estimates leading to 4-6% changes in APE and VNB. We maintain that growth and cost challenges would result in inferior value creation. Given the undemanding FY24E P/EV of 0.6x, we maintain our Hold rating on the stock,” it stated.

Motilal Oswal
Motilal Oswal maintained its Buy score on LIC with a goal value of Rs 830, which suggests an upside potential of 37% from the present market costs.

“We slightly raised our FY24/FY25 VNB estimates by 4%/6%. We estimate LIC to deliver a 15% CAGR in APE over FY23-25, thus enabling a 27% VNB CAGR,” Motilal stated.

(Disclaimer: Recommendations, solutions, views and opinions given by the specialists are their very own. These don’t symbolize the views of the Economic Times)

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