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Shares of Life Insurance Corporation of India (LIC) hit over seven-month high at Rs 689.60, gaining 4.5 per cent on the BSE in Wednesday’s intra-day trade on the back of heavy volumes.
The stock of state-owned life insurer was quoting at its highest level since January 27, 2023. With today’s gain, the stock has recovered 30 per cent from its 52-week low of Rs 530.20 touched on March 29. It had hit a record high of Rs 918.95 on December 20, 2022.
The trading volumes at the counter have more-than-doubled today. A combined 3.1 million equity shares changed hands on the NSE and BSE till 10:27 AM. In comparison, the S&P BSE Sensex was down 0.03 per cent at 65,763.
LIC’s management reiterated a focus on selling more profitable products such as non-par plans, specifically protection and annuity plans. To this end, the company introduced two non-par products during the June quarter. The share of non-par in annual premium equivalent (APE) has improved from 7.8 per cent in Q1FY23 to 10.2 per cent in Q1FY24, and management is looking to increase it further.
The company continues to target group business which is also providing good margins. Q1 was soft, but management expects higher growth from Q2 onwards with better market share.
According to analysts at ICICI Securities, LIC is treading well towards increasing value of new business (VNB) by pushing its product mix towards non-participating, improving persistency and expansion in the distribution channels.
Business strategy has dynamic methods like active repricing in many segments to gain market share while maintaining VNB growth targets as well as structural methods of increasing persistency and digital transformation. “We have always believed that product mix driven possible increase in VNB margin (aim is to close in on private peer levels within next 3-4 years) is achievable and underappreciated by the market,” the brokerage firm said in Q1FY24 result update.
According to analysts, key business initiatives in FY23 have started to yield results. This includes: new product launches, deepening digital footprint within the organisation, product modifications to increase persistency, and focus on increasing banca and alternate channels. They maintain ‘Buy’ rating on LIC with a target price of Rs 917 per share.
The stock is trading at 0.6x FY25E EV, ~70 per cent discount to private listed peers which appears unwarranted. Analyst at BOB Capital Markets said it values LIC at an unchanged 0.7x FY25E EV, a narrower ~65 per cent discount to peers.
“Based on revised estimates, we have a new target price of Rs 770 (vs Rs 775), which offers 20 per cent upside – maintain BUY given the company’s entrenched brand equity, clear market leadership, superior agency force, improving margin profile and robust claim settlement ratio,” the brokerage firm said in result update.
The stock of state-owned life insurer was quoting at its highest level since January 27, 2023. With today’s gain, the stock has recovered 30 per cent from its 52-week low of Rs 530.20 touched on March 29. It had hit a record high of Rs 918.95 on December 20, 2022.
The trading volumes at the counter have more-than-doubled today. A combined 3.1 million equity shares changed hands on the NSE and BSE till 10:27 AM. In comparison, the S&P BSE Sensex was down 0.03 per cent at 65,763.
LIC’s management reiterated a focus on selling more profitable products such as non-par plans, specifically protection and annuity plans. To this end, the company introduced two non-par products during the June quarter. The share of non-par in annual premium equivalent (APE) has improved from 7.8 per cent in Q1FY23 to 10.2 per cent in Q1FY24, and management is looking to increase it further.
The company continues to target group business which is also providing good margins. Q1 was soft, but management expects higher growth from Q2 onwards with better market share.
According to analysts at ICICI Securities, LIC is treading well towards increasing value of new business (VNB) by pushing its product mix towards non-participating, improving persistency and expansion in the distribution channels.
Business strategy has dynamic methods like active repricing in many segments to gain market share while maintaining VNB growth targets as well as structural methods of increasing persistency and digital transformation. “We have always believed that product mix driven possible increase in VNB margin (aim is to close in on private peer levels within next 3-4 years) is achievable and underappreciated by the market,” the brokerage firm said in Q1FY24 result update.
According to analysts, key business initiatives in FY23 have started to yield results. This includes: new product launches, deepening digital footprint within the organisation, product modifications to increase persistency, and focus on increasing banca and alternate channels. They maintain ‘Buy’ rating on LIC with a target price of Rs 917 per share.
The stock is trading at 0.6x FY25E EV, ~70 per cent discount to private listed peers which appears unwarranted. Analyst at BOB Capital Markets said it values LIC at an unchanged 0.7x FY25E EV, a narrower ~65 per cent discount to peers.
“Based on revised estimates, we have a new target price of Rs 770 (vs Rs 775), which offers 20 per cent upside – maintain BUY given the company’s entrenched brand equity, clear market leadership, superior agency force, improving margin profile and robust claim settlement ratio,” the brokerage firm said in result update.
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