Comments
Target: ₹760
CMP: ₹605.65
Life Insurance Corporation of India (LIC) reported broadly in-line numbers in H1-FY24, owing to weaker growth, strong boost in embedded value led by equity-market performance, and part provision on account of increased family pension liabilities.
We continue to perceive that structural challenges—such as slower growth-led market-share loss, sticky operating expenses, and higher sensitivity to equity market-led EV volatility—are likely to cloud LIC’s outlook. However, LIC is currently trading at about 0.50x Sep-25E P/EV, with the structural challenges and a possible share sale by the government already in the price.
We upgrade the stock to Buy, as we believe higher surplus generation and slower growth could lead to a step jump in dividend, as solvency is healthy. Our fair value Sep-24 target price is ₹760/share, and we value the shares at 0.63x Sep-25 EV (Cost of Equity: 13 per cent; Operating RoEV: 10 per cent; Single Stage Growth: 5 per cent).
Downside risks: Prolonged lack of clarity on dividend pay-out; share supply glut on account of OFS by the government of India; sharp correction in equity markets adversely impacting the embedded value.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.