Buy Life Insurance Corporation; target of Rs 1080: Motilal Oswal

BUY

Motilal Oswal's research report on Life Insurance Corporation

In 1QFY26, LIC reported net premium income of INR1.2t (in line), up 5% YoY. Renewal premium grew 6% YoY to INR599b, while first-year/single premium grew 1%/4% YoY to INR75b/INR519b. New business APE rose 9% YoY to INR127b (in line), with individual APE growing 9% YoY to INR70.6b and group APE rising 16% YoY to INR55.9b. Absolute VNB grew 21% YoY to INR19b (in line). VNB margin improved YoY to 15.4% from 13.9% in 1QFY25 but was slightly below our expectation of 16%. Management expects premium growth to recover in 2HFY26 and the focus remains on absolute VNB growth. VNB margin improvement will be driven by product mix shift toward non-par, cost optimization, higher contribution from high-ticket size products, and improvement in persistency.

Outlook

We have kept our FY26/FY27 estimates unchanged considering the in-line performance in 1QFY26. Reiterate BUY with a TP of INR1,080 (premised on 0.7x FY27E EV).

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Life Insurance Corporation_08082025_Motilal Oswal