LIC share price declined up to 1.49% on Q2 results. Should you buy, sell or hold the stock? Check brokerage views | Mint
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Business News/ Markets / Stock Markets/  LIC share price declined up to 1.49% on Q2 results. Should you buy, sell or hold the stock? Check brokerage views
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LIC share price declined up to 1.49% on Q2 results. Should you buy, sell or hold the stock? Check brokerage views

Q2 Result review - Life Insurance Corporation of India declared Q2 results on 10 November, post market hours. The topline decreased by 9.2% & the profit decreased by 49.35% YoY. As compared to the previous quarter, the revenue grew by 6.85% and the profit decreased by 16.65%.

Life Insurance Corporation (LIC)Premium
Life Insurance Corporation (LIC)

Life Insurance Corporation of India share price declined up to 1.49% on the BSE in morning trades on Monday. Life Insurance Corporation of India had declared its Q2 FY24 results on 10 November 2023, post market hours. The topline decreased by 9.2% and the profit decreased by 49.35% YoY. As compared to the previous quarter, the revenue grew by 6.85% and the profit decreased by 16.65%.

The Selling, general & administrative expenses rose by 55.58% sequentially and decreased by 41.47% Y-o-Y. The operating income was down by 12.36% sequentially and decreased by 50.1% Y-o-Y.

The Earning per share came at 12.77 for Q2 FY24, which decreased by 42.51% Y-o-Y.

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Commenting on the results analysts at Emkay Global Financial services said that Life Insurance Corporation of India Ltd (LIC) reported broadly in-line numbers in H1FY24, owing to weaker growth, strong boost in embedded value led by equity-market performance, and part provision on account of increased family pension liabilities. They added that they continue to perceive that structural challenges such as slower growth-led market-share loss, sticky operating expenses, and higher sensitivity to equity market-led EV (embedded Value) volatility—are likely to cloud LIC’s  outlook.

 However, Emkay says that on valuation front LIC is currently trading at ~0.50 times September 2025 estimated Price to EV ratio, with the structural challenges and a possible share sale by the government already in the price. Hence Emkay has upgraded the stock to BUY, as they believe higher surplus generation and slower growth could lead to a step jump in dividend, as solvency is healthy. Also their fair value September 2024 estimated target price is Rs760 per share (offering 25% upside), and they value the shares at 0.63x September-25 EV (Cost of Equity: 13%; Operating Return on Embedded value (RoEV): 10%; Single Stage Growth: 5%)

RoEV is an important measure of a company's valuation. This indicates as how much profits a company is able to release each year out of the embedded value it has locked in.

Embedded Value (EV) and Value of new Business (VNB) are two important parameters for assessing the prospects and valuations of an insurance provider.

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Motilal Oswal Financial Services Ltd (MOFSL) also has raised its EV (embedded value) estimates owing to better-than-expected equity market returns. They reiterate our BUY rating on the stock with a Target price of 850 (0.7 times FY25 estimated EV).

However, MOFSL has cut its VNB (value of new business) estimates to factor in the decline in VNB margins.

 

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 taking any investment decisions

 

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Published: 13 Nov 2023, 10:00 AM IST
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