The Street has turned more favourable toward life insurance stocks over the past couple of months, as regulatory concerns eased, companies adjusted to new surrender value norms, and shifted focus from equity-linked policies to more traditional products. The June quarter results echoed this trend: HDFC Life delivered a stable performance, while ICICI Prudential’s results were mixed. Still, analysts believe there is room for further re-rating of these stocks in FY26.
So far this year, shares of HDFC Life and SBI Life have rallied between 20 and 40 percent, while LIC and ICICI Prudential have seen more modest, flat-to-positive movements.
Shrikant Chouhan, head of equity research at Kotak Securities, attributed the mixed trends to differences in product strategies.
A diversified product mix helped HDFC Life and SBI Life attract investor interest, while ICICI Prudential lagged due to weak growth in unit-linked products (a portion of the premium goes toward life cover and the rest is invested in equity or debt funds) and challenges in the bancassurance channel. LIC, meanwhile, remains more sensitive to equity market swings and depends heavily on agency-led growth (network of agents who sell insurance policies directly to customers).
Nevertheless, Chouhan is optimistic about the FY26 outlook for life insurers, as the base effect from last year fades and non-par and protection products gain traction. “SBI Life remains best placed for further re-rating, while ICICI Prudential offers catch-up potential,” he noted.
Nandish Shah, fundamental research analyst at Motilal Oswal Financial Services also shared a positive outlook, expecting better opportunities for life insurance stocks in the second half of FY26.
“Growth is expected to recover in H2 as the base from the previous year turns favourable, the impact of surrender regulations is now behind us, and we could also see supportive regulatory actions on the GST front,” Shah said, sharing a "buy" rating for HDFC life and ICICI Prudential life with a target price of Rs 910 and Rs 780, respectively.
As of now, two players have reported their June quarter results: HDFC Life and ICICI Prudential Life.
HDFC Life posted a stable June quarter, with double-digit growth seen in both annualised premium equivalent (APE) and value of new business (VNB). VNB margins also saw steady expansion at 25.1 percent due to renewed focus on traditional products. Going ahead, the management expects second half to be stronger than the first half owing to faster activation of new agencies.
In contrast, ICICI Prudential Life reported fall in both APE and VNB growth due to slowdown in ULIP momentum and market volatility. Going ahead, the management believes that increased traction of non-linked products will drive product level margins and will support profitability.
Brokerages in general have also become more bullish compared to last year. All four life insurers saw an increase in the number of "buy" recommendations from June 2024 to June 2025.
SBI Life retained the highest number of Buy calls, rising from 31 to 35. HDFC Life also gained, with "buy" calls increasing from 29 to 31 and no "sell" ratings as of June 2025, further improving sentiment. LIC saw a modest improvement, with "buy" calls going from 15 to 16 and "sells" dropping from 2 to 1. ICICI Prudential Life saw the sharpest jump in "buy" calls, from 18 to 23, while "hold" recommendations declined slightly.
Currently, the valuations reflect this optimism. SBI Life trades at about 63 times its one-year forward price-to-earnings (PE) ratio, while HDFC Life and ICICI Prudential are even higher, around 70x. In stark contrast, LIC trades at just 11x forward PE, showing the market’s expectation of stronger growth and profitability from SBI, HDFC, and ICICI Prudential.
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