LIC Shares Gain 6% After Insurance Behemoth’s Net Profit Jumps Multifold; Details

LIC Share Price: Life Insurance Corporation (LIC) shares jumped nearly 6 per cent on the NSE in Friday’s trade following the June quarter earnings for the financial year 2024, where the state insurer reported a near 14-fold jump in its net profit.

LIC’s shares opened higher at Rs 666 and soon climbed 5.8 per cent to hit an intraday high of Rs 679 on NSE.

State-owned LIC net profit jumped 13 per cent from Rs 683 crore in the year-ago period.

However, the life insurance behemoth’s net premium income was nearly flat at Rs 98,362.75 crore as compared to Rs 98,351.76 crore in Q2FY23.

On a quarter-on-quarter basis, LIC’s net profit slipped 29 per cent from Rs 13,428 crore reported in fourth quarter of FY23. LIC’s net premium income fell 25 percent QoQ.

LIC, which is the largest investor in the stock markets, said its income from its investments jumped almost 30 per cent in Q1 to Rs 90,309 crore from Rs 69,571 crore in the same quarter of last fiscal.

On a sequential basis, net profit fell 29 per cent from Rs 13,428 crore reported in the previous quarter. The net premium income dropped 25 per cent quarter-on-quarter (QoQ).

Income from investments jumped 30 per cent to Rs 90,309 crore during the quarter under review, compared with Rs 69,571 crore in the corresponding quarter of the previous fiscal.

Other income during the quarter stood at Rs 75 crore, down nearly 53 per cent from Rs 160 crore a year ago. The first-year premium dipped 8 per cent during the first quarter to Rs 6,811 crore as against Rs 7,429 crore in the same period of last year.

LIC reported a profit before tax of Rs 9,634 crore in the June quarter, which too jumped multiple times from just Rs 799 crore reported in the year-ago period.

The insurer’s solvency ratio stood at 1.89 in the April-June period, as against 1.87 in the last-year period and 1.88 in the preceding March quarter.

So far this calendar year, however, the stock of this life insurer declined 1 per cent, as against an 8 per cent rise in the S&P BSE Sensex. Earlier, shares of LIC hit a 52-week low of Rs 530 apiece on March 29, 2023.

In the past three months, meanwhile, shares of LIC surged 21 per cent on the BSE.

Commenting on the Q1 results, Siddhartha Mohanty, Chairperson, LIC said that the company’s efforts to improve persistence across cohorts have started to show results.

“We have achieved an increase in our non-par product mix as a percentage of the overall individual business. Our overall expense ratio has become better and our margins are stable on a YoY basis. Simultaneously, we continue to work on strategies for diversifying the channel mix,” he added.

What Do Analysts Say?

Analysts at Motilal Oswal Financial Services remain bullish on LIC, saying that the company has all levers in place to maintain industry-leading position and ramp-up growth in highly profitable segments.

“We expect LIC to deliver a 15 per cent compounded annual growth rate (CAGR) in APE over FY23-25, thus enabling a 27 per cent VNB CAGR. However, we expect operating RoEV to remain modest at 10.9 per cent, given its lower margin profile than private peers and a large EV base,” the brokerage firm added in a post-result review note.

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