LIC share price surges over 6%, brokerages raise target price on robust Q3 results; will the rally continue?

Life Insurance Corporation of India (LIC) share price climbed by more than 6% on Monday's session, touching an intraday high of ₹1,150 on BSE. The rise in LIC share price today was in response to brokerages upgrading the stock and raising target prices in the midst of impressive Q3 results. LIC share price today opened at ₹1,149.95 apiece on BSE today. At 12:19 IST, LIC share price was trading at ₹1,053.20 apice, down over 2%.

LIC recorded a 49% rise in its standalone net profit in Q3FY24 to ₹9,444 crore from ₹6,334 crore in the same period the previous fiscal year. The boosts in net premium income and net income from investments were the primary drivers of the better performance.

Also Read: LIC Q3 profit up 49% at ₹9,444 cr, net premium income grows 4.6%

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Brokerage views on LIC

Global brokerage JPMorgan hiked the target price of LIC from ₹690 to ₹1,340 and upgraded LIC stock from neutral to overweight, said ET in its news report. Given the increased market interest in the relative value merit of PSUs over private companies, it stated that price outperformance might continue in the near future. Religare upped their target price for the company to ₹1,232 and upgraded it to accumulate from hold, as per the news report.

Kotak Institutional Equities has raised target prices for LIC from ₹1,040 to ₹1,300.

"We have raised our fair value (FV) to ₹1,300 from ₹1,040 and revised up our EV estimate by 5.7-6.8%, largely reflecting higher unrealised gains and the recent market rally. Tailwinds to its equity portfolio provide a further upside; the value of LIC’s equity investment across time periods.

We also acknowledge that LIC’s value remains sensitive to capital market movements, any correction in capital markets can provide a downside to its EV and fair value," said Kotak Equities in its report. 

Further brokerage, Emkay Global Financial Services, has reiterated ‘buy’ rating on the stock and has revised the target price to ₹975 from ₹850.

Also Read: LIC share price Today Live Updates : LIC closed today at ₹1106.25, up 5.86% from yesterday's ₹1045

According to the brokerage's analysis, the company's H1FY24 earnings led the LIC share price to rise considerably (up 36% compared to a 12% increase on the Nifty 50).

The attractive valuation following an extended period of underperformance since listing, strong EV growth driven by buoyant equity markets, the chance of a dividend hike, and the fact that the worst structural issues of lower growth and higher costs are likely behind the brokerage with expectations of growth revival from FY25 on a favourable base and expanding product offerings are the main drivers of the outperformance.

“Despite this recent run-up, the relatively attractive valuation (FY25E P/EV: 0.7x) and hope of revival in growth remain supportive of the stock performance; also, the large amount of unrealised equity gains gives the company reasonable flexibility to materially increase dividends,” the brokerage said.

As per trendlyne data, LIC share price has surged 71.36% in the last three months. Let's look at if the LIC share price will maintain its present trend or whether a profit booking could be seen in the coming months. 

Also Read: LIC's journey so far: A muted debut, a long rough patch and a stellar rebound, this stock has seen it all

Will the LIC stock rally continue?

According to Ruchit Jain, Lead Research Analyst at 5paisa, the corrective phase in the stock post-listing ended in the month of November '23, after which the stock rallied higher with high volumes. The stock has surpassed its IPO price, and in spite of the recent price-up move, the volume still remains robust, indicating high buying interest even at current levels. However, stock could see some short-term corrections due to overbought technical set-ups. Hence, traders should look for buying opportunities in declines.

Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, said that LIC has given a spectacular upmove in the last three months and has surpassed and settled above its listing rates. In the last two sessions, prices have corrected a bit, but we remain strong optimistic on this stock and expect further any dips would continue to act as a buying opportunity and this stock to outperform in the near term, ₹980 - 1000 to act as support, whereas the stock looks poised for ₹1300.

Also Read: LIC share price hits record high ahead of Q3 results today. Buy, hold or book profit?

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