LIC share price: Brokerage bullish on insurance giant, expects up to 38% rise despite Adani-Hindenburg row — Check target

LIC share price: Life Insurance Corporation of India (LIC) shares, which are battered due to the Adani-Hindenburg row, are expected to surge by around 38 per cent or Rs 220 apiece, according to domestic brokerage house Motilal Oswal’s report.

The brokerage was bullish on the stock amid robust third-quarter earnings, saying that LIC has all the levers in place to maintain its industry-leading position and ramp up growth in the highly profitable product segments. However, changing gears for such a vast organisation requires a superior and well-thought-out execution plan, it added.

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The analyst at Motilal Oswal expects LIC to deliver a 15 per cent compound annual growth rate (CAGR) in annual premium equivalent (APE) over FY23-25, thus enabling a 21 per cent value of the new business (VNB) CAGR.

Here, APE means the sum of the total value of regular – or recurring – premiums plus 10% of any new single premiums written for the fiscal year, and VNB is used to measure the profitability of the new business written in a period.

LIC is trading at 0.6x FY24E EV, which appears reasonable considering the gradual recovery in margin and diversification in the business mix and hence the brokerage reiterates a ‘Buy’ call on the stock with a target price of Rs 830 on long-term after a recent beating due to Adani-Hindenburg Saga.

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The insurance behemoth released its December quarter results on Thursday, wherein the profit grew manifold, aided by a transfer of Rs 5,670 crore from non-participatory to shareholders’ accounts.

LIC's net profit in Q3 stood at Rs 6,334.19 crore, up 27 times year-on-year, as compared to Rs 234.91 crore in the year-ago period.

Also Read: Can LIC stock surge to over Rs 950 per share?

The public-sector insurer’s share price tumbled on Monday despite reporting a multi-fold profit in Q3 earnings for this fiscal. The stock dipped over 2 per cent to close at Rs 607 per share from Friday’s closing of Rs 620 per share on the BSE.

Since Hindenburg Research released its report accusing Adani Group of fraud and stock manipulation, the shares of LIC have also taken a beating, mainly due to its investment in Adani group firms’ stock. The counter has cracked around 15 per cent from January 24, 2023, to Monday’s closing.