LIC jumps 5% on 14x profit growth in Q1; stock up 21% in 3 months

The company's assets under management (AUM) increased 12.41 per cent YoY to Rs 46.11 trillion as on June 30, compared to Rs 41.02 trillion a year ago

LIC, Life Insurance Corporation

Lovisha Darad New Delhi

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Shares of Life Insurance Corporation (LIC) rallied 5 per cent to Rs 676 per share on the BSE in Friday's intra-day trade, after the company's net profit grew multi-fold year-on-year (YoY) to Rs 9,543.71 crore in the April-June quarter for fiscal year 2023-24 (Q1FY24).
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.
In the recently concluded quarter, the company's total premium income was flat at Rs 98,363 crore, as against Rs 98,352 crore, in the year-ago period. Group business premium, meanwhile, stood at Rs 35,590 crore in Q1FY24 versus Rs 38,345 crore in Q1FY23.
A total of 32 lakh policies were sold in the individual segment in Q1FY24 versus 36 lakh policies sold in the year-ago period.
Persistency ratios on the premium basis in the June-ended quarter were 78.3 per cent for 13th month and 62.73 per cent for 61st month.
Besides, assets under management (AUM) increased 12.41 per cent YoY to Rs 46.11 trillion as on June 30, compared to Rs 41.02 trillion a year ago.
However, value of new business (VNB) declined 6.8 per cent YoY to Rs 1,302 crore in the June-ended quarter.
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.
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.

Technical View
Bias: Positive
Target: Rs 700
Support: Rs 640; Rs 620

The stock is seen holding its 20-DMA (Daily Moving Average) support on a consistent basis since late April 2023. With today's up move the stock has attempted a breakout above the higher-end of the Bollinger Bands on the daily chart at Rs 662.

As long as the stock holds above Rs 662, the positive momentum can help the stock notch further gains. However, in case, the stock fails to hold the Rs 662 level, it could dip to Rs 650-odd levels.

On a broader scale, the bias is likely to remain positive as long as the stock sustains above Rs 620, below which the next support is seen at Rs 595. On the upside, the stock can potentially rally towards the Rs 700 mark.

(With inputs from Rex Cano)

First Published: Aug 11 2023 | 10:21 AM IST

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