LIC share surges up to 8% post ₹21,741 cr refund from I-T

Shares of Life Insurance Corporation (LIC) of India Ltd rose as high as 8% today after the insurance giant announced that it received ₹21,740 crore worth of refunds from the Income Tax Department. LIC is yet to receive the remaining ₹3,700 crore from the I-T department.

Shares of LIC opened a 3.8% gap up and surged to an intra-day high of ₹1,130 on the BSE. At the current session closing, the company's m-cap stands at ₹6.6 lakh crore. At the time of the closing of the trading session, the LIC share settled at ₹1,052.15, up 12.75 points or 1.23%, on the BSE.

"Life Insurance Corporation of India had received refund orders for Assessment Years 2012-13, 2013-14, 2014-15, 2016-17, 2017-18, 2018-19 and 2019-20. The total amount of refund was Rs 25,464.46 crore. In this regard, the Income Tax Department has released Rs 21,740.77 crore on 15.02.2024. The corporation is pursuing for the balance with the Income Tax Department," an LIC exchange filing says.

LIC's share has seen a significant rally in the past three months. The LIC share has surged 6.14% in the past five weeks, 20.07% in the past six months and 61.41% in the past six months. The scrip has seen a 22.58% surge in the year-to-date alone and a significant 75.78% in the past year.

In another announcement, the LIC said it has launched a new product -- LIC's Amritbaal -- on February 17, 2024, in the non-linked, non-participating, individual, savings, life insurance plan for the domestic market.

LIC's net standalone profit surged 49% year-on-year to ₹9,444 crore in Q3 FY24. During the same quarter last year, LIC's profit was recorded at ₹6,334 crore. The company's net premium rose 5% YoY to ₹1.17 lakh crore against ₹ 1.11 lakh crore in the year-ago period. Sequentially, LIC's net profit and premium surged 19% and 9%, respectively. During the said quarter, the value of LIC's new business rose 46% to ₹2,634 crore on a net basis against ₹1,801 crore in the year-ago period. LIC's net VNB margin was recorded at 20%, up from 14.6% in the year-ago period.

BoB Capitals, in its report on LIC this month, raised the target price on the stock to Rs 1,140, while the brokerage cut the ratings to 'Hold', saying the recent rally in the LIC scrip has capped the upside.

"The stock is currently trading at 0.85x FY26E EV and we value LIC at a higher 0.9x multiple (vs. 0.8x earlier), an unchanged ~60% discount to peers. We raise our embedded value (EV) estimates by 4-5% for FY24-FY26 assuming a positive MTM impact from equities and now anticipate an 11% CAGR in EV over FY23-FY26 to Rs 8tn. Based on our revised estimates, our TP rises to Rs 1,140 (vs. Rs 965)," the BoB Caps report said.

The brokerage said though it remains positive on the LIC stock, given its entrenched brand equity and market leadership, the recent 30% rally has left just a 5% upside. “(It) compels us to downgrade the stock from "BUY" to "HOLD".”