Buy or Sell or Hold LIC: Brokerage houses are looking positive on LIC’s stock and have advised to invest with high targets. The share is 36 percent below the issue price.
Life Insurance Corporation Stock Price: LIC shares are witnessing cautious trading after the March quarter results; Today the stock is trading at Rs.606 with a slight gain. The profit of the company has increased more than 5 times in the March quarter, but there has been a decrease in the overall income. The income from premium has also decreased, due to which the concern about the stock has increased among the investors. Especially among those investors who bought its shares at the time of IPO. Compared to the IPO, its valuation has decreased by about 2.15 lakh crores. The question arises whether this loss will be recovered if the stock is held. After all, what is the future of LIC’s stock. After the results, the brokerage house has a mixed response regarding the stock.
MK Global: HOLD rating on LIC
Brokerage house MK Global has given HOLD rating on LIC stock with target of Rs 660. The brokerage says that the insurance company registered 12.5% YoY growth in APE in FY2023 and stood at 56700 crores. Whereas in VNB there was 20.7% YoY growth and it was 9200 crores. This is less than expected. The growth in VNB was due to expansion in margins. Margins increased by 110bps to 16.2%, which is in line with estimates. PAT of Rs 36400 crore achieved due to lower tax provisions, which is 30% higher than expected. EV in FY23 reached 582200 crores which is 3.8% above the estimate. An increase of 7.5% has been registered in this. The brokerage says that LIC is currently trading at an undemanding valuation of FY24E P/EV of 0.6x. In such a situation, the brokerage has advised HOLD with a revised target of Rs 660 per share.
Motilal Oswal: BUY rating on LIC
Brokerage house Motilal Oswal says LIC has the potential to maintain its leading position in the industry and drive growth in high profitability product segments (mainly protection, non-par and savings annuities). However, for such a large organization, a better execution is needed to change the gear. The brokerage expects LIC to achieve 15% CAGR growth in APE in FY23-25. However, it is estimated that the operating RoEV will remain modest at 10.9%. It has a lower margin profile and a larger EV base as compared to private peers. LIC currently trades at 0.6x FY24E EV, which looks reasonable considering the gradual recovery in margins and diversification in business mix. Given this, the brokerage has maintained BUY rating on the stock with a target price of Rs 830. In terms of current price, it can get 38 percent return.
JM Financial: BUY rating on LIC
Brokerage house JM Financial has given a big target of Rs 940 while giving BUY rating on LIC shares; In terms of current price of Rs 606, there is a scope of 55% return in it. Brokerage House says that we expect LIC to report ROEV in a similar range going forward. LIC’s current under-demand of 0.5x FY25E EV is and we expect it to leverage its key strengths such as large customer base (278+mn in force individual policies), strong agency network (51.3% of total industry agents as on March 23), strong Will rerate due to brand equity and importantly the sovereign guarantee (on sum assured and bonus) attached to the LIC policy.
Shares at 36% discount from IPO price
LIC’s stock is currently looking 35 percent weaker than its IPO price. The IPO price was Rs 949. This stock has never been able to touch the IPO price since its listing. Rs 841 is the one-year high for the stock, while Rs 530 is the all-time low. The current price of the stock is around Rs.606. That is, the stock is trading at a discount of about 36 per cent from the issue price. The stock was listed in the stock market last year i.e. in May 2023. During the IPO, the valuation of LIC was estimated at 6 lakh crores, now the market cap has come down to 3.85 lakh crores.
