LIC Q4 Results Review - VNB Margin Contracts 220 Basis Points YoY: Motilal Oswal

Motilal Oswal Report

Life Insurance Corporation of India Ltd.’s Q4 FY24 profit after tax grew 2.5% YoY to Rs 137.6 billion. For FY24, LIC’s PAT rose 11.8% YoY to Rs 406.8 billion.

Net premium grew 15.6% YoY to Rs 1.52 trillion in Q4 FY24. Market share in premium dropped to 58.9% in FY24 from 62.6% in FY23.

Value of new business (net) was flat YoY at Rs 36.45 billion, whereas annual premium equivalent grew 16% YoY to Rs 199.5 billion in Q4 FY24. Thus, VNB margin (net) contracted to 17.2% in Q4 FY24 versus 19.4% in Q4 FY23.

For FY24, LIC’s VNB margin came in at 16.8% (versus 16.2% in FY23).

We retain our VNB estimates for FY25/FY26. With the growth in the share of non-Par segment, we expect the VNB margin to improve (~19% by FY26). Reiterate Buy with a target price of Rs 1,270 (premised on 0.8 times FY26E enterprise value).

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