ICICI Securities bullish on LIC stock post strong Q2 earnings; sees upside of 48% on long-term - check triggers
LIC reported a multi-fold jump in net profit to Rs 15,952 crore in the September quarter, boosted by profits from its investments.
LIC share price: State-owned insurer Life Insurance Corporation of India (LIC) reported strong second-quarter earnings for the financial year 2022-23 (Q2FY23) on Friday. Amid this, brokerage firm ICICI Securities maintained a Buy rating on LIC share price with a target of 917 apiece, implying a 48 per cent upside.
LIC reported a multi-fold jump in net profit to Rs 15,952 crore in the September quarter, boosted by profits from its investments. The insurance behemoth had a net profit of Rs 1,434 crore in the year-ago period, according to a regulatory filing.
Life Insurance Corporation of India (LIC) is the Indian insurance market leader with a 44 per cent share of the total APE (Annual Premium Equivalent) market as of FY22, the brokerage said, it added, robust back-book, high brand value, difficult-to-replicate agency strength are competitive moats.
Under-penetration, especially through a sum assured lens, high entry barriers and favourable regulatory environment make the brokerage positive on life insurance prospects in India and LIC is a play on the same, ICICI Securities said.
“Increasing non-participating mix and change in surplus distribution policy are significant growth drivers of the value of a new business (VNB) and in turn embedded value (EV). This makes LIC a strong investment proposition considering that it is currently trading at 0.73x FY22 price to EV,” it added.
“The multiple of 0.7x to EV is equivalent to almost 50 per cent market share correction based on current sensitivity of EV to equity market movements. Even at this multiple, resultant upside at CMP is 48 per cent, implying an attractive valuation of the stock,” ICICI Securities said.
Shares of LIC closed on Friday over 1 per cent higher to Rs 628 per share on the BSE as against a nearly 2 per cent rise in the S&P BSE Sensex. The stock has corrected over 33 per cent from its issue price of Rs 945 apiece and more than 28 per cent from its listing price of Rs 875 per share.
In the last one month, the counter has gained over 2 per cent underperforming the market as benchmark indices gained over 7 per cent.
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