Synopsis: Citi maintains a Buy on LIC with 68% upside, citing expected market share recovery, improved margins from better product mix, undervaluation concerns easing, and potential stock re-rating.
This company offers participating insurance products and non-participating products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products is now in the spotlight after Citi maintained a BUY target with 68% upside from the current levels.
With a market capitalisation of Rs. 5,07,739 cr, the shares of Life Insurance Corporation Ltd closed at Rs. 802.75 per share, down from its previous close of Rs. 819.75 per share. The stock has posted weak performance, declining 4% over the past year, falling 13% in the last six months, and slipping a further 6% in the past month.
Citi on LIC
Citi has maintained a “Buy” rating on LIC with a target price of Rs. 1,345, which implies a potential upside of about 67.54% from the current levels. This indicates that Citi believes the stock is significantly undervalued and expects strong price appreciation as the company’s fundamentals improve and market sentiment turns more favourable.
One of the key positives highlighted is market share recovery. Citi expects a pickup in market share, helped by new product launches. These new offerings are expected to support growth in individual APE (Annual Premium Equivalent), which is an important metric for measuring the quality and sustainability of life insurance sales.
Citi also expects margin improvement in the second half (H2) of the financial year. This is driven by a better product mix, with a higher share of non-participating (non-par) products, annuities, and retail protection plans. These products typically carry higher margins compared to traditional participating (par) policies, and a shift toward them should improve profitability and return ratios over time.
The brokerage notes that LIC’s current valuation remains depressed, largely because the market is not assigning sufficient value to the MTM (mark-to-market) component within LIC’s embedded value. Embedded value includes the present value of future profits plus net assets, and Citi believes the MTM losses or volatility are being overly penalised, creating a valuation disconnect and an opportunity for re-rating.
Finally, Citi believes a re-rating of the stock is on the cards. As growth improves, margins expand, and concerns around valuation and product mix ease, investor confidence could return. This could lead to higher valuation multiples, driving the stock price closer to Citi’s target.
About the company
LIC’s scale remains unparalleled in India’s life insurance industry. In FY25, it sold ~1.78 crore individual policies, with an average ticket size of Rs. 35,092 per policy. Its FY25 new business premium stood at ~Rs. 2.27 lakh crore, translating into a dominant 57.05% market share, over 6 times that of the second-largest insurer. LIC’s embedded value as of March 2025 was ~Rs. 7.77 lakh crore, while assets under management were ~Rs. 54.5 lakh crore, highlighting its balance sheet strength.
On the distribution front, LIC had ~14.87 lakh agents as of March 2025, commanding a 47.61% market share by agents. Productivity remains strong, with 11.68 policies sold per agent in FY25, significantly higher than peers. Customer trust is reflected in a 99.41% individual death claim settlement ratio, with ~24,420 crore individual death claims paid during FY25.
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