Emkay Global Financial Assigns Buy Rating to LIC, Targets Rs 1100

LIC Posts Strong Q4FY26 Performance, Exceeds Estimates

Emkay Global Financial's research report on Life Insurance Corporation (LIC) highlights a robust Q4FY26 performance, with the company delivering a VNB (Value of New Business) margin of 25.7%, a 6.9 percentage point year-over-year (YoY) increase. This surpasses Emkay Global Financial's estimate of 20.5%. Additionally, APE (Annual Premium Equivalent) stood at Rs229.5 billion, a 21.8% YoY increase, exceeding the estimated Rs212.8 billion.

The strong VNB margin during the quarter was driven by robust growth in the non-par segment and favorable movement in the yield curve. The Board declared a final dividend of Rs10 per share, with a pre-bonus dividend of Rs20 per share. Furthermore, the corporation remains conservative in maintaining solvency capital, considering the implementation of 'Risk Based Solvency' which could impact solvency capital after the transition.

Outlook and Recommendations

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To incorporate the Q4 developments, Emkay Global Financial has increased its APE estimates by 4-5% and raised VNB margin estimates by 200-240 basis points. This results in a ~15-16% increase in VNB over FY27-28E. The research firm maintains a BUY rating on LIC and increases its March 2027 estimated target price (TP) by 10% to Rs1,100, implying a FY28E P/EV of 0.7x.