LIC Q1 Results Highlights and Stock Surge: A Buying Signal?

LIC Q1 Results Highlights

State-run Life Insurance Corporation of India on August 8 reported 9% rise in consolidated net profit at ₹10,544 crore for the quarter ended June 30, 2024, It reported consolidated net profit of ₹9,635 crore in the year-ago period.

The insurer's net premium income rose 16% to ₹1.14 lakh crore in Q1FY25 as compared to ₹98,755 crore in Q1FY24.

Solvency ratio of the insurer was at 1.99% compared to 1.89% in the corresponding quarter last year. The gross non-performing asset quality (GNPA) of LIC for the quarter was at 1.95% compared to 2.48% last year.

New Business Premium Income (Individual) increased by 13.67% to ₹11,892 crore. Overall annual premium equivalent (APE) jumped 21.28% to ₹11,560 crore. Individual Business Non-Par APE increased by 166% to ₹1,615 crore.

Group Business APE increased by 34% to ₹4,813 crore. Non-Par APE share within Individual business at 24% for Q1 FY25 as compared to 10.22% in Q1 FY24. Value of New Business (VNB) increased by 24% to ₹1,610 crore. VNB Margin (Net) increased by 20 bps to 14%.

Chief executive officer and managing director (CEO and MD) Sidhartha Mohanty said the insurer sold 10.86% more policies in Q1FY25 versus last year.

"Total of 35,65,519 policies were sold in the individual segment during the quarter ended June 30th, 2024 as compared to 32,16,301 policies sold during the quarter ended June 30th 2023 registering a growth of 10.86%," Mohanty said at the post results media conference.

Persistency ratio for 13th month was at 72.35% compared to 75.10%. And for the 61st month was at 58.41% versus 59.25%.

Impact on LIC Share Price Post Q1 Results

Shares of Life Insurance Corporation of India Ltd (LIC) are expected to be in focus during Friday's trading session following the company's mixed financial results for the June 2024 quarter.

On Thursday, LIC's stock closed at ₹1,125.70, showing a slight gain for the day. The company's market capitalization surpassed the ₹7.12 lakh crore mark. Notably, the stock has almost doubled in value since reaching its 52-week low in October 2023.

For the first quarter of the current fiscal year, LIC held a market share of 39.27% in the individual business segment and 76.59% in the group business segment. The total premium for the individual business in the quarter ending June 2024 increased by 7% year-on-year to ₹67,192 crore. Meanwhile, the Group Business premium income grew by 31% year-on-year to ₹46,578 crore.

Brokerage firm Investec noted that LIC's earnings missed expectations on the Value of New Business (VNB) margin, which was influenced by a shift in the product mix. However, the Annual Premium Equivalent (APE) for the quarter exceeded estimates by 13%. Investec has maintained a "hold" rating on the stock with a target price of ₹875 per share.

Currently, LIC is showing a strong recovery from the support level of ₹1,070, which is near its 50-day Exponential Moving Average (EMA). This recovery suggests resilience and potential for further upward movement. The stock has recently surpassed its 20-day EMA and is now trading above all major moving averages, indicating strength and a bullish market sentiment, according to Sumeet Bagadia, Executive Director at Choice Broking.

"The stock has experienced a strong breakout from a falling trend line and has successfully retested these levels, reinforcing the validity of the breakout. The momentum indicator, RSI, has also rebounded and is currently at 55.49, further supporting a bullish outlook," Bagadia stated.

Given the current technical indicators and overall market conditions, Bagadia suggested that investors and traders might view this as a positive signal. He recommended considering buying the stock with a stop loss at the support level of ₹1,070 and targeting higher levels around ₹1,280.

About LIC

Listed in May 2022, LIC is the largest insurance provider in India. The company offers a range of products, including participating insurance policies and non-participating products such as unit-linked insurance plans, savings insurance products, term insurance, health insurance, and annuity and pension plans.