LIC share price hits record high: Share price of Life Insurance Corporation (LIC) of India hit a fresh record high of Rs 1,197 per share on the BSE on Friday. This comes after the share price of LIC rose 3.1 per cent on the Exchange in intraday trade.
At 12 noon, LIC stock price was trading 2.7 per cent higher at Rs 1,192 per share, against a rise of 0.8 per cent in the benchmark BSE Sensex. Around 4 million shares have changed hands on the NSE and BSE together till the time of writing this report.
With today’s gains, LIC’s market capitalisation (m-cap) hit a record high of around Rs 7.56 trillion, making the life insurer the second-largest listed public sector company.
In the overall m-cap rankings, LIC of India is now the eighth largest listed company in India, behind Reliance Industries, Tata Consultancy Services, HDFC Bank, ICICI Bank, Bharti Airtel, Infosys and State Bank of India.
LIC Stock Price in 2024
So far in calendar year 2024, LIC’s share price has risen 39.2 percent on the BSE. In comparison, the Sensex index has risen around 12 percent during the same period. So far in July, the stock has risen 17.3 percent.
This comes amid LIC’s growing share of the new premium business segment. According to a Company standard The report shows that LIC of India’s market share in the NBP increased to 64.02 per cent in Q1 FY25, compared to 59.59 per cent in Q4 FY24 and 61.42 per cent in Q1 FY24, partly due to a significant increase in group premiums. READ MORE ABOUT IT HERE
On the contrary, private insurance companies have given up their position due to the negative effects of recent legislative changes.
Life insurance companies can expect strong growth in sales of unlinked policies in the near term, according to analysts, after regulator Insurance Regulatory and Development Authority (Irdai) asked industry players to implement norms to ensure better payouts to customers who terminate their policies early.
The insurance industry must implement these standards by September 30, 2024, Irdai said in June. Non-linked or traditional policies are not linked to the market.
“Life insurance companies should pay a special surrender value (SSV) after the first policy year, provided the customer has paid one full year’s premium. Currently, companies do not pay such an amount to customers who transfer their policies in the first year,” according to a report by Company standard. READ MORE
Given all this, it is expected that life insurance companies will discontinue their products and modify their offerings by adjusting the payments to policyholders at maturity and the commission payments to distributors.
Analysts therefore expect the sector to engage in a ‘sell-off’, mainly through channel pushes, before discontinuing current products.
LIC Financial Performance, Target Price
Meanwhile, the Board of Directors of LIC of India is scheduled to meet on August 8, 2024 to discuss and approve the financial results for the April-June quarter of the current financial year (Q1FY25).
In Q3 FY24, LIC of India’s net profit grew 2.5 per cent year-on-year (YoY) to Rs 13,762.64 crore on the back of wage changes and arrears.
Meanwhile, annual premium equivalent (APE) grew nearly 10.7 per cent to Rs 21,180 crore from Rs 19,137 crore in the same period last year. The value of new business premium (VNB) declined 1.6 per cent to Rs 3,645 crore YoY.
“VNB grew 4 per cent YoY in FY24 to Rs 9,580 crore, better than its listed insurance peers. With robust growth in non-par products and no one-off sales base effect in Q4FY23, we expect even stronger VNB growth in FY25,” analysts at Ashika Institutional Equities said in a post-results update report.
The VNB margin (net basis) increased from 16.2 percent in FY 2023 to 16.8 percent in FY 2024.
The management, on its part, had said that it plans to focus on profitability rather than market share gains and reiterated the strategy to increase the profitable non-par share going forward. The company expects its APE growth to be in double digits in FY25, helped by savings growth apart from other business segments.
“With continued strong quarterly performance, we expect the company to continue to perform well in the period ahead with double-digit growth in embedded value (EV) and significant improvement in VNB margin to 19-20 percent by FY26E. We expect increase in share of profitable non-par business to ~18-20 percent and the company’s focus to increase its agency footprint in Tier-II and Tier-III cities to drive growth going forward,” Ashika analysts said with a ‘Buy’ rating and a target price of Rs 1,430.
First print: Jul 26, 2024 | 12:35 PM IST