Shares of LIC jumped 3% to Rs 898 on May 28 after the company reported a mixed set of Q4FY25 results. LIC’s net profit soared 38% year-on-year to Rs 19,013 crore, but its net premium income dipped 3% to Rs 1.4 lakh crore. This combination left analysts divided on the stock’s near-term outlook.
What Does This Mean for You?
For everyday investors, the profit jump sounds like good news. LIC is making more money, which usually means a healthier company. But the slip in premium income tells a different story. Premium income is the lifeblood of any insurance firm. Less premium means fewer new customers or lower sales. That’s a warning sign.
Think of LIC as a car. The engine (profit) is roaring stronger, but the fuel tank (premium income) is getting emptier. Will it run far?
Bullish Views: Growth and Margins to Watch
Motilal Oswal sees plenty of fuel left in the tank. They’ve kept a “buy” rating with a Rs 1,050 target price. Their optimism comes from LIC’s rising share of non-participating (non-par) policies, which have better margins. This helps LIC’s Value of New Business (VNB) margin—a key measure of profitability. LIC’s management also sounded confident about a premium growth comeback soon.
Macquarie agrees, rating LIC as “outperform” and setting a higher target of Rs 1,215. They warn about cautious VNB growth but say LIC’s current low valuation offers a safety cushion. They highlight better cost control and the shift to non-par products as margin boosters.
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Cautious Take: Revenue Miss and Product Challenges
Goldman Sachs is less impressed. They hold a “neutral” view with a Rs 880 target price. Their concern? LIC missed revenue expectations, especially in individual participating and group insurance segments, which fell 16% year-on-year. The traditional agency sales channel also took a hit after new product launches in October 2024.
LIC’s gross non-performing assets (NPAs) improved, dropping 55 basis points to 1.46%. This shows better asset quality, easing some investor fears.
So, Buy, Sell, or Hold?
If you believe LIC can bounce back on premium growth and margins, buying or holding makes sense. The valuation is attractive compared to peers, and the profit jump is promising. But if you worry about premium dips and product shifts hurting revenue, a cautious approach or selling might be wise.
As always, balance your decisions with your risk appetite and investment goals.
Disclaimer:
This article is for information only and not financial advice. Please do your own research or talk to a financial expert before investing. Investing has risks, and past results don’t guarantee future success.
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