Brokerages cheer LIC's better-than-expected Q4 results, predict stock to rise up to 30% in long-term

On May 28th, Life Insurance Corporation of India (LIC) stock rose by 2.6%, reaching ₹1,062 per share. This positive movement was fueled by the company's Q4FY24 (January-March) earnings, which exceeded market expectations. Despite the recent gains, brokerages maintain their long-term optimism for LIC, citing its attractive valuation and robust growth potential.

LIC shares have surged over 24% in 2024, significantly outperforming the Nifty 50 index, which has risen by 5% during the same period. The stock reached an all-time high of ₹1,175 per share on February 9, 2024.

JPMorgan analysts maintained an 'Overweight' rating on LIC, setting a target price of ₹1,340 per share, which represents a potential upside of 29% compared to the current market price.  "We believe that LIC stock is inexpensive and there is further room for strong business growth. The market seems to take market share gains as a key catalyst for the stock," they said.

LIC's net profit witnessed a modest 2.5% YoY increase to ₹13,762 crore in Q4FY24, while its new business value grew by 4.6% YoY to ₹9,583 crore. In the individual segments, LIC sold 2.03 crore policies, slightly lower than the 2.04 crore policies sold in FY23. The insurer's assets under management (AUM) surged by 16% YoY to ₹51.21 lakh crore in Q4FY24. LIC's consolidated total revenue for Q4 FY2024 declined by 25.26% YoY, from ₹201,021.88 cr in Q4 FY2023 to ₹251,790.11 cr. On a quarterly basis, the consolidated PAT increased by 45.54%.

In the financial year concluded in March 2024, the consolidated profit after tax (PAT) reached ₹40,915.85 crores, exhibiting a 13.67% growth from ₹35,996.65 crores recorded in the previous financial year (FY 2023). For FY 2024, the consolidated total revenue amounted to ₹856,950.52 crores, representing a substantial increase compared to ₹791,234.48 crores recorded in FY 2023.

Citi analysts have issued a 'Buy' recommendation for LIC, setting a target price of ₹1,295 per share, representing a potential 25% upside from current levels. However, they are seeking further clarification on the relationship between mark-to-market valuation and core embedded value for the fiscal year 2024.

The largest insurer in the country witnessed an improvement in asset quality during the last quarter of FY24. The gross non-performing asset (GNPA) registered a decrease from 2.56% to 2.01% compared to the corresponding period in the previous year. LIC declared a final dividend of ₹6 per share, following an earlier interim dividend of ₹4 per share. LIC maintained its dominance in the market, capturing a 58.87% share of First Year Premium Income (FYPI) for FY24.In individual business, LIC held a market share of 38.44%, while in group business, its market share reached 72.30%.

In fiscal year 2024, the company's total premium income reached ₹4,75,070 crore, a slight increase from ₹4,74,005 crore in the previous fiscal year. This total comprises ₹3,03,768 crore from individual business premiums and ₹1,71,302 crore from group business premiums. Notably, the Value of New Business (VNB) rose to ₹9,583 crore in FY2024, a significant improvement from ₹9,156 crore in FY2023.

Life Insurance Corporation of India (LIC), owned by the Government of India, is a provider of life insurance plans. The company offers endowment plans, money-back plans, term assurance plans, pension plans, special plans, unit plans, group schemes, child plans, and health insurance plans.

It operates through zonal offices in Mumbai, Kolkata, Chennai, Hyderabad, Delhi, Kanpur, Bhopal, and Patna. LIC offers insurance products in India through associates and agents. The company and its associates also have operations in Fiji, Mauritius, the UK, Bahrain, the UAE, Kuwait, Qatar, Oman, Nepal, Sri Lanka, Saudi Arabia and Kenya. LIC is headquartered in Mumbai, Maharashtra, India.