LIC gains 3% after Q1 earnings. Here’s what Morgan Stanley and Motilal Oswal recommend

Shares of Life Insurance Corporation of India (LIC) gained 2.5% to Rs 397 on the BSE on Friday after the state-owned insurer reported a 23% year-on-year (YoY) rise in standalone net profit to Rs 13,492 crore for the quarter ended June.

The company had posted a profit of Rs 10,986 crore in the corresponding quarter last year. Net premium income grew 7% YoY to Rs 1.27 lakh crore during the quarter.

According to IRDAI data, LIC retained its leadership in the domestic life insurance market with an overall 60.1% share of first-year premium income. During the quarter, it held a 38.89% market share in the individual business and 70.9% in the group business.

Premium growth was driven by both segments. Individual business premium increased 6% to Rs 75,416 crore from Rs 71,474 crore a year ago, while group business premium rose 9% to Rs 51,834 crore from Rs 47,726 crore.

LIC sold 31.02 lakh individual policies during the June quarter, up 2% from 30.40 lakh policies in the year-ago period. On an annualised premium equivalent (APE) basis, total premium stood at Rs 13,692 crore in Q1FY27, with the individual business contributing Rs 7,532 crore (55%) and the group business accounting for Rs 6,160 crore (45%).

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The insurer also reported a sharp improvement in profitability. Value of new business (VNB) jumped 61% YoY to Rs 3,136 crore from Rs 1,944 crore, while the VNB margin expanded by 750 basis points to 22.9% from 15.4% a year earlier.

LIC shares: Buy, sell or hold?

Goldman Sachs maintained its ‘Neutral’ rating on LIC with a target price of Rs 475, implying an upside of around 22.5% from the current market price. While the brokerage noted that annualised premium equivalent (APE) growth fell short of its expectations, it said stronger-than-expected value of new business (VNB) growth and a sharp expansion in VNB margins, supported by a favourable product mix, prompted it to raise its FY27-FY29 EPS estimates.

Emkay Global reiterated its ‘Buy’ rating on LIC and retained a target price of Rs 550, implying an upside of around 42%. The brokerage highlighted better-than-expected margin performance, with the VNB margin expanding to 22.9% and VNB rising 61% YoY. It also raised its FY27-FY29 VNB margin estimates and earnings forecasts, citing an improving product mix, higher profitability and a stronger capital position.

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Motilal Oswal maintained its ‘Buy’ rating on LIC with a target price of Rs 480, implying an upside of around 24% from the current market price. The brokerage pointed to the 61% YoY growth in VNB and the expansion in the VNB margin to 22.9%, driven by a richer non-par product mix. It also raised its FY27-FY28 VNB margin estimates, supported by improving profitability, robust growth in the protection business and a stronger solvency position.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)