LIC shares jump 9% on mixed Q4: Should you buy, sell, or hold?

18-Jun-2025

Shares of LIC surged 9 percent to Rs 948 per share on May 28 following the release of a mixed set of financial results for the March quarter (Q4FY25). Most brokerages maintained a bullish stance on the stock, citing improving margins and attractive valuations as key growth drivers in the near term.

Analysts at Motilal Oswal have reiterated their "buy" rating on LIC, assigning a target price of Rs 1,050 per share. They highlighted a higher contribution from non-participating (non-par) policies, which positively impacted LIC’s Value of New Business (VNB) margin in Q4. Management also sounded optimistic about a rebound in premium growth.

Macquarie echoed similar sentiments, maintaining an "outperform" rating with a target price of Rs 1,215 per share. The brokerage acknowledged caution around VNB growth but said the valuation offers a cushion. “An increasing mix of non-par products and improving cost efficiencies should help sustain margin improvement,” it noted.

On the other hand, Goldman Sachs maintained a more cautious "neutral" stance, with a lower target price of Rs 880 per share. Their conservative view stems from LIC’s revenue miss, especially in its individual participating and group insurance segments, which together declined by 16 percent year-on-year. The agency channel also saw headwinds following the introduction of new products from October 1

From a quarterly perspective, LIC’s net profit jumped 38 percent year-on-year to Rs 19,013 crore in Q4. However, net premium income slipped 3 percent year-on-year to Rs 1.4 lakh crore. Notably, the company`s gross non-performing assets (NPAs) improved, dropping 55 basis points to 1.46 percent during the quarter.

LIC attributed its flat APE (Annualized Premium Equivalent) growth in FY25 to changes in product regulations, noting that agents required time to understand the new guidelines.

"Many products had to be redesigned and refiled, which impacted sales momentum. Additionally, the company sold a higher share of single-premium policies during the year, which weighed negatively on APE growth," the management said in a conversation with CNBC-TV18.

Looking ahead to FY26, LIC said its focus will shift to weighted risk premium and APE, with expectations of double-digit growth in both metrics. The management also highlighted margin improvements in FY25, including Q4, and projects 2 to 3 percent increase in VNB margin in FY26, targeting around 20 percent for the year.

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Source : Money Control