LIC Shares Drop Despite Profit Growth in Q2
Shares of Life Insurance Corporation of India (LIC) experienced a notable decline of 4.25 percent on Friday, settling at Rs 390.60 and pushing its market capitalisation below the Rs 5 lakh crore mark. This dip occurred despite the country's largest life insurer announcing a 20 percent year-on-year (YoY) increase in net profit, reaching Rs 12,115 crore for the second quarter.
The company's net premium income also saw a healthy rise, climbing 16.2 percent YoY to Rs 1.47 lakh crore. Breaking down premium streams, single premium income surged 34 percent YoY to Rs 68,425 crore, while renewal premium income grew 5 percent to Rs 68,718 crore. However, first-year premium income registered a 4 percent YoY decline, totaling Rs 10,484 crore.
Key Financial Metrics and Brokerage Views
Beyond premiums, LIC reported robust financial health across several indicators. Net investment income soared 38 percent YoY to Rs 2,855 crore. Assets Under Management (AUM) expanded to Rs 59.60 lakh crore, marking a 4.16 percent increase from the previous year. The solvency ratio improved to 2.35, and gross non-performing assets (NPAs) stood at a manageable 1.16 percent for the quarter.
Despite the immediate share price reaction, domestic brokerage firms have largely maintained a positive stance on LIC's outlook:
- JM Financial: The firm noted LIC's strong positioning under proposed IRDAI distribution norms, with 92 percent of individual new business premium being agency-led. Given the low expense ratio of 10.4 percent, management is comfortable with potential commission caps. JM Financial maintains 8-10 percent growth expectations and has raised its target price to Rs 520, valuing the stock at 0.6 times September 2028E Embedded Value Per Share (EVPS) of Rs 855.
- Motilal Oswal Financial Services: This brokerage reiterated its 'buy' rating with a target price of Rs 470. While acknowledging a sequential decline in Value of New Business (VNB) margin and subdued growth, primarily due to weak Unit-Linked Insurance Plan (ULIP) demand, Motilal Oswal highlighted year-on-year margin expansion. This expansion was supported by a higher contribution from non-participating (non-par) business and improving product-level margins. They anticipate an improved growth trajectory as ULIPs regain momentum, projecting an operating Return on Embedded Value (RoEV) in the range of 11.5-12 percent.
- Systematix Institutional Equities: Maintaining a 'buy' rating with a revised target price of Rs 470, Systematix attributed the subdued ULIP Annualised Premium Equivalent (APE) to weak equity market sentiment and LIC's strategic shift towards higher-ticket policies. The firm noted healthy growth in group business and expects APE growth to improve in the second half of FY27, driven by a recovery in ULIPs, continued traction in non-par savings and protection, and recently launched products. The embedded value stood at Rs 7.98 lakh crore.
The stock has experienced a decline of over 17 percent over a specified period and has remained broadly flat over the past year, having hit a 52-week low of Rs 361 in April 2026.