Citi Research Projects Over 50% Upside Potential For LIC Despite Slashing Target Price — Here's Why

Citi Research slashed Life Insurance Corp's target price despite the company reporting strong numbers for the July–September. It reduced the target price to Rs 1,354 from Rs 1,370 apiece. The current target price implies a 51% upside potential from Thursday's close price.

The brokerage maintained a buy rating on the stock. It will monitor market share stabilisation in individual annualised premium equivalent for any re-rating.

Citi Research increased the mark-to-market cut to 50% from 40% for Life Insurance Corp after it factored in downside risks from the present sluggishness in the market.

Life Insurance Corp reported a strong quarter as far as operations are concerned. The insurance company focused on re-alignment of product mix, and improving sub-segment margins, Citi Research said in a note.

The company reported that its value of new business grew 145 basis points on the year despite higher unit-linked insurance plan within overall non-saving businesses.

Citi Research expects that Life Insurance Corp's 12-month rolling VNB margin trajectory to be at -0.9% because of the operation assumption changes impact in the first half of the current financial year. The company should control overheads, expected higher volumes, which will drive the operating leverage and improving quality of business to maintain its VNB margins.