LIC share target price: Life Insurance Corporation (LIC) of India last week announced its results for the quarter ended September 30. the state-owned insurance company’s net premium income saw a year-over-year (YoY) decline of 18.7 per cent to Rs 1.07 lakh crore. This decrease was primarily due to a 43.4 per cent drop in single premium income and a 12.5 per cent fall in Annualized Premium Equivalent (APE).
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Following the results, investors may be curious to know what to do with the LIC shares they own. Religare Broking has prompted a ‘Hold’ rating on the LIC stock. The brokerage house has set a target price of Rs 646.
For investors, this ‘Hold’ rating suggests a cautious optimism. Take a look at key factors behind this call:
Individual vs. Group Business: While the group business premium declined significantly (45 per cent YoY), LIC’s individual business remained relatively stable, with an 8 per cent increase in new business premium. This stability in the individual segment is crucial, as it suggests a resilient revenue stream despite challenges in group premiums.
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Product Mix Shift: Currently, LIC’s product mix is heavily skewed towards par products, which form 89 per cent of the APE mix. However, there’s a slow but gradual shift towards a more balanced mix, including non-par products, which offer higher margins. This shift is expected to contribute to improved profitability.
Agency Channel’s Dominance: The agency channel continues to be LIC’s core strength, forming 96 per cent of its new business premium. Despite a slight decline in the bancassurance channel and a marginal increase in the direct and online channels, the agency network’s dominance is a stable factor for LIC’s business model.
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Improved Persistency: Persistency rates, which measure the consistency of policy renewals, have shown improvement. This is particularly notable in the 13th month persistency rate, which has improved by 67 basis points YoY. However, there’s a slight decline in the 61st month persistency rate, influenced by micro-insurance products.
