GST 2.0: LIC, HDFC Life to GIC — insurance stocks gain after JPMorgan’s rating upgrade. Do you own any?

Insurance stocks traded higher on Monday after foreign brokerage JPMorgan upgraded ratings and raised target prices on select life and non-life insurers, citing sustained growth potential and resilient balance sheets. HDFC Life Insurance, Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC Re) shares, among other insurance stocks gained over a percent in trade.

JPMorgan expects the compounding momentum of India’s insurance sector to persist, similar to trends observed over the past five years, supporting further balance sheet growth and demonstrating resilience through market and regulatory cycles.

The brokerage forecasts annual growth of 15% in new business value (NBV) for life insurers and 12% in book value for non-life players over the next three years, offering what it sees as an attractive risk-reward profile.

LIC shares remain JP Morgan’s top ‘Overweight’ pick. It has a LIC share price target of ₹1,152 apiece. Greater clarity on GST tax-related product strategies could act as a near-term catalyst during the 2QFY26 reporting season in mid-October, it said.

JPMorgan has upgraded HDFC Life shares to ‘Overweight’ and raised target price to ₹980 apiece from ₹750 earlier. The brokerage firm also upgraded GIC shares to ‘Overweight’, with an increased target price of ₹480 per share from ₹197 earlier.

Life Insurance Companies

According to JPMorgan, despite strong operating performance, the market has assigned conservative valuations to life insurers. Regulatory concerns have compressed the price-to-embedded value (P/EV) multiple from 4.3x in 2019 to 1.8x estimated for FY26.

JP Morgan sees this as a compelling opportunity to add exposure, anticipating multiple expansion, and does not expect further major regulatory tightening in the next few years.

Life Insurance Company of India (LIC) is projected to deliver the strongest growth over the next three years, supported by a rising share of non-participating products, which increased to 30.3% of individual APE in Q1FY26 from 18.3% in FY24.

HDFC Life Insurance Company is likely to regain its valuation premium within one to two years, with IFRS-17 standards better reflecting its reserve strength and higher contractual service margin compared to peers more reliant on ULIPs. SBI Life Insurance Company is also seen benefiting from a strong bank distribution network.

Non-life Insurance Companies

JP Morgan believes India’s non-life insurance sector continues to face profitability challenges, with underwriting margins under pressure and combined ratios above 100%.

Even so, it upgraded GIC Re shares, noting improvements in overseas underwriting from the 2025 renewal season and potential earnings catalysts as legacy claims are cleaned up. However, ICICI Lombard General Insurance Company was not upgraded, given an unfavourable domestic underwriting cycle.

JPMorgan’s pecking order in the sector stands as: LIC, SBI Life, HDFC Life, GIC Re, New India Assurance, ICICI Lombard, and ICICI Prudential Life.

Meanwhile, the Goods and Services Tax (GST) exemption on individual life and health insurance policies came into effect today. The GST Council has removed the 18% GST on health insurance premium to enhance affordability, and improve insurance penetration across the country.

At 11:50 AM, LIC share price was trading 1.56% higher at ₹908.20 apiece, HDFC Life Insurance Company share price was trading 0.32% higher at ₹785.05 apiece, while GIC shares were trading 0.93% higher at ₹367.35 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.