Life Insurance Corporation (LIC) shares were under pressure on Monday, after the state-run life insurance giant received a Goods and Services Tax (GST) notice to the tune of Rs 290 crore. The LIC stock declined by as much as Rs 3.7, or 0.6 per cent, to Rs 647.5 apiece on BSE, falling for the fifth session in a row. 

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In a regulatory filing post-market hours on Friday, LIC said the tax notice was from the Bihar- Additional Commissioner State Tax (Appeal), Central Division, Patna. 

LIC said it would file an appeal against the said order before the GST Appellate Tribunal. The total demand comprised GST of Rs 166.8 crore, interest of Rs 107.1 crore and penalty of Rs 16.7 crore, it added. 

As per the order, the tax authority alleged that among other violations, LIC did not reverse the input tax credit (ITC) availed on the premium received by the corporation from policyholders.

Last month, ICICI Securities maintained a 'buy' rating on Life Insurance Corporation with a price target of Rs 917, after the insurer reported its financial results for the June quarter. The brokerage's target implies an upside of almost 41 per cent from LIC's closing price last Friday.

Analysts at ICICI Securities hold positive views on LIC's key business initiatives in the year ended March 2023 that they believe have started to yield results. 

These include: 

  • New product launches
  • Deepening digital footprint within the company
  • Product modifications to increase persistency
  • Focus on increasing bancassurance and alternate channels

The brokerage values the LIC stock at a multiple of 0.8 times its embedded value estimate for the year ending March 2025. 

How LIC fared in Q1

Life Insurance Corporation staged a mixed performance for the first three months of the current financial year.

Its standalone net profit grew nearly 14 times on a year-on-year basis to Rs 9,544 crore for the quarter ended June 30, while its net premium income increased to Rs 98,363 crore from Rs 98,352 crore a year ago, according to a regulatory filing. 

The insurer's solvency ratio—a measure of a company's ability to cover its long-term liabilities with its cash flow— improved to 1.89 per cent as against 1.88 per cent a year ago.  

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