Life Insurance Corporation of India (LIC) has all the levers to maintain its industry-leading position and drive growth in highly profitable product segments (primarily protection, non-PAR, and savings annuities). However, shifting gears for such a large organization requires a better and well thought-out execution, said Motilal Oswal.
The recently gone public life insurance company has reported a manifold jump in its June quarter net profit. 682.9 crore as compared to 2.9 crore in the year-ago period.
LIC reports 20% year-on-year (YoY) growth in net premiums, led by 35%/9% growth in new/renewal business, as easing of COVID-19 restrictions eased sales of policies for the insurer Which largely depends on its agent. First year premium for the reporting quarter came in at 7,429 crore as against 5,088 crore in the year-ago period.
The company said that compared to the previous March quarter, the performance was down in all parameters. The company, which mostly runs its business through 1.3 million sales agents, was hit last year by the pandemic-led lockdown that disrupted the work of its agents, who focused on in-person engagement. We do.
“We expect LICI to deliver ~13% CAGR in APE during FY 2012-24, while VNB margins are likely to improve to 14.6%. However, we anticipate RoEV operations to remain modest ~12.4% on a lower margin profile than its private peers. The valuation of LICI, at 0.7x FY24E EV, appears reasonable given the gradual improvement in margins and diversification in the business mix,” said the brokerage while maintaining its buy rating. LIC Shares with an unchanged target price of 830.
LIC steadily increased its market share in CY22. It launched two new non-PAR products in 1QFY23. The management said it would focus only on the launch of non-PAR products. It also launched a channel-specific product for the first time.
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