LIC share price surges after analysts project up to 55% upside after Q1 results

Shares of Life Insurance Corporation of India Ltd. (LIC) have the potential to rise another 55% from current levels, analysts who track the company suggested after the company’s June quarter results that were reported after market hours on Thursday, August 7.17 out of the 22 analysts that have coverage on LIC recommend “buying” the stock, while four others have a “hold” rating and a solitary analyst has a “sell” call.

It must be noted that LIC shares have low free float in the market, as the government still holds 96.5% stake in the company, having divested 3.5% during its IPO in May 2022.

LIC reported a 5% growth in its New Business Premium for the June quarter in comparison to the same quarter last year, while Value of New Business (VNB) margins increased by over 150 basis points from the year-ago period.
Brokerage firm Macquarie has an “outperform” rating on LIC with a price target of ₹1,215, which is close to the stock’s all-time high of ₹1,222.Macquarie sad that the decline in cost ratios drove improvement in LIC’s VNB margins and despite a relatively low VNB Compounded Annual Growth Rate (CAGR) potential, LIC has valuation support going for it.

Citi has a “buy” rating on LIC with a price target of ₹1,370, which is the highest on the street for India’s largest insurance company.

LIC’s management has highlighted green shoots in improving activation rates, rise in sum assured and ticket size per agent and augmentation of the agent base through the inclusion of younger talent.

Stabilisation of market share trends in the individual business remains a key monitorable factor for LIC, according to Citi.

Shares of LIC are trading 4.1% higher at ₹921.65. The stock trades below its IPO price of ₹949 but is now above its retail IPO price of ₹904.