LIC share price falls after insurer estimates March embedded value at Rs 5.41 lakh cr; analysts see 17% upside

Life Insurance Corporation of India (LIC) share price fell over half a per cent on Friday, a day after the insurer said its Indian embedded value (IEV) for March has been pegged at Rs 5.41 lakh crore. “As on March 31, 2022, the IEV of LIC of India has been determined to be Rs 5,41,492 crore as compared to Rs 95,605 crore as on March 31, 2021 and Rs 5,39,686 crore on September 30, 2021,” the state-run company said. The stock fell to an intraday low of Rs 707 on NSE, down 0.7% today. According to the recent data, LIC was among the largecap stocks where mutual funds trimmed stakes in the June selloff. LIC share price has tumbled around 25 per cent from its IPO price of Rs 949 apiece. However, analysts at Motilal Oswal see a 17 per cent potential rally in the stock, going forward.

LIC well-positioned to maintain industry-leading position

The brokerage in its recent note said that LIC has all the levers in place to maintain its industry-leading position and ramp up growth in highly profitable product segments (mainly Protection and Non-PAR Savings/Annuity). However, changing gears for such a vast organization requires superior and well-thought execution that also has to endure frequent rotation at the top management level. “We estimate LIC to deliver ~10% CAGR in NBP over FY22-24, while improving margin trajectory and stability in the capital market will enable improved EV growth going forward,” it said. 

According to the analysts at Motilal Oswal, LIC’s valuation at 0.7x FY24E EV appears reasonable considering the gradual margin recovery and diversification in the business mix. They maintain ‘Buy’ rating on the stock with a target price of Rs 830 per share, based on 0.8x FY24E EV.

VNB grows 83% YoY, Annualised Premium Equivalent at Rs 50,390 crore

LIC’s EV stood at Rs 5.4 lakh crore in FY22 (broadly similar to the last disclosed EV for September 2021. Meanwhile, the Value of New Business (VNB) stood at Rs 7,619 crore, as compared to Rs 4,167 crore in the year-ago period. VNB grew 83 per cent on-year in FY22 v/s an 11 per cent growth in APE. “The VNB margin, for the year ended March 31, 2022, is 15.1 per cent as compared to VNB margin of 9.9 per cent for the year ended March 31, 2021,” the filing said.

The ROEV (Return on Embedded Value) for March 2022 came in at 11.9 per cent as compared to 36.9 per cent for March 2021, LIC said, while clarifying that the calculations have taken into account the bifurcation impact of the split of single life fund into par and non-par fund during FY 2021-22. LIC’s annualised premium equivalent (APE) for FY22 was determined as Rs 50,390 crore, the release stated. This is higher as compared to the APE FY21, which was Rs 45,588 crore, it added.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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