Now Reading: LIC’s VNB jumps 61%, but valuation limits investor appeal
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LIC’s VNB jumps 61%, but valuation limits investor appeal
LIC’s value of new business rose 61% in the first quarter, driving a 750-basis-point year-on-year increase in its VNB margin to 22.9%, Livemint reports. Annualised premium equivalent grew 8% to Rs 13,692…
The Story in Brief
LIC’s value of new business rose 61% in the first quarter, driving a 750-basis-point year-on-year increase in its VNB margin to 22.9%, Livemint reports. Annualised premium equivalent grew 8% to Rs 13,692 crore. A shift towards more profitable products supported growth, with non-participating individual savings policies rising 59% to Rs 1,293 crore, while ULIP APE fell 17%.
Macquarie retained its Outperform rating and Bernstein kept a Market-perform rating, NDTV Profit reports. LIC management expects the VNB margin to reach the mid-twenties. Emkay Global estimates LIC trades at 28 times FY27 price-to-VNB, against 25 times for HDFC Life, despite lower projected growth for LIC. Livemint says a successful offer for sale and strong results may not yet resolve that valuation hurdle.
The Indian Opinion
The easy story is that a 61% VNB jump proves LIC has decisively turned around. The opposing claim, that soft APE growth makes the result weak, also misses the product mix. The harder fact is valuation: investors are paying more for LIC than HDFC Life despite lower projected growth, according to Emkay’s estimates. The test is whether LIC can lift its margin into the mid-twenties while sustaining growth beyond FY27.
Sources (2): ndtvprofit.com, livemint.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
