LIC shares traded higher on Friday, August 7, gaining 1.41% or ₹5.45 to ₹393.00 on NSE following the strong Q1FY27 results announcement. The stock opened at ₹393.45, touched an intraday high of ₹396.85, and recovered from a low of ₹391.10 before closing in positive territory. The positive market reaction reflects continued investor confidence in the state-owned insurer's robust financial performance and operational improvements, with gains coming after investors reacted positively to the insurer's June-quarter earnings and continued dominance in India's life insurance market.
LIC delivered exceptional financial results in the first quarter of FY27, with the standalone net profit jumping 23% year-on-year to ₹13,492 crore compared to ₹10,986 crore in the previous year. The company's net premium income grew 7% YoY to ₹1.27 lakh crore, supported by growth across both individual and group insurance businesses. Premium income from individual policies rose 6% to ₹75,416 crore, while premium from group insurance policies grew 9% to ₹51,834 crore. The insurer also sold 31.02 lakh individual policies during the quarter, compared with 30.4 lakh policies a year earlier, indicating steady customer demand despite increasing competition from private insurers. According to latest reports, Value of new business (VNB) jumped 61% YoY to ₹3,136 crore from ₹1,944 crore, while VNB margin expanded by 750 basis points to 22.9% from 15.4% a year earlier, driven by efficiency gains and structural shift of product mix.
The June-quarter performance highlighted LIC's continued leadership in the domestic life insurance sector, with the company accounting for 60.10% of India's first-year premium income during the quarter. Its market share stood at 38.89% in the individual insurance segment and an impressive 70.90% in the group insurance business, reflecting the insurer's strong institutional presence and extensive distribution network. This market dominance demonstrates LIC's ability to maintain its competitive position despite increasing competition from private insurers, with the company continuing to leverage its large agency channel targeted at the mass customer segment.
LIC has successfully engineered a strategic shift in its product strategy towards higher sum-assured, non-PAR policies, which accounted for 32.49% of individual business in Q1FY27, up from 30.34% a year ago. As per HDFC Securities, this represents a significant departure from the company's traditional focus on mass customer segment. The improvement in VNB margin was largely driven by higher contribution from non-participating insurance products, whose share increased to 32.49% of individual business from 30.34% a year ago. These products generally carry better profit margins because insurers are not required to share investment gains with policyholders, contributing to the company's enhanced profitability from newly sold insurance policies.
Following the strong quarterly performance, Motilal Oswal reiterated its 'Buy' rating on Life Insurance Corporation of India (LIC) and raised its target price to ₹480 from ₹388, implying a 24% upside potential. The brokerage believes LIC's improving product mix, rising profitability from new business and sustained market leadership strengthen its long-term growth outlook. HDFC Securities also maintained its 'Add' rating on LIC with a target price of ₹555, implying an upside of around 42%. The brokerage has raised its VNB margin estimates for FY27 and FY28 considering the strong Q1FY27 performance and rising contribution from non-par products, expecting operating RoEV in the range of 11.5-12% going forward. According to Motilal Oswal, the company is on track to achieve mid-20% VNB margin, closer to the industry average, with some uncertainty from interest rate movements.
