ICICI Securities has released a research report on Life Insurance Corporation of India (LIC), setting a target price of Rs 1040. The report highlights that LIC’s Value of New Business (VNB) and Embedded Value (EV) grew 4.5% and 6.8% year-over-year in FY25, respectively. Strategic initiatives have been successful in shifting the product mix towards non-participating products, with 28% of individual Annual Premium Equivalent (APE) in FY25 compared to 18% and 9% in FY24 and FY23, respectively. The company has also revised its pricing and product strategy to maximize value for stakeholders, including increasing surrender values. Additionally, LIC has expanded its non-agency distribution channels, which contributed 6.1% to individual New Business Premium (NBP) in FY25, up from 3.9% and 4% in FY23 and FY24. The total number of agents stood at 1.49 million as of March 2025, representing a 5.1% year-over-year growth. Digital initiatives such as DIVE and Jeevan Samarth have also shown improvement. ICICI Securities believes that the product mix-driven rise in VNB margin is achievable, as demonstrated by LIC, but notes that volume growth will be crucial for double-digit VNB growth.
The outlook is based on a valuation of 0.7x FY27E EV of INR 9.3 trillion, which reflects the risk of EV sensitivity to market movements and a lower core Return on Embedded Value (RoEV) profile compared to peers on a high base.
