LIC shares fall 3% as Q2 VNB misses estimates. Jefferies cuts target but lists 3 reasons to buy the stock

Shares of Life Insurance Corporation of India (LIC) dropped 3% on Friday after the insurance behemoth reported a nearly 20% year-on-year rise in consolidated net profit to Rs 12,115 crore for the July-September quarter of the ongoing financial year 2027, supported by strong growth in premium income and higher investment earnings.

While the bottom line increased from the same period last year, it declined 11% from the Rs 13,548 crore reported in the first quarter of the same financial year. Net premium income meanwhile increased over 16% YoY to Rs 1.47 lakh crore, from Rs 1.26 lakh crore in the September quarter of FY26. This growth in premium income was largely driven by a sharp increase in single-premium collections, reflecting higher contributions from policies where customers pay the entire premium upfront. The shares of the company fell to Rs 396.45 apiece on Friday morning.

Net investment income in the shareholders' account increased by around 38% YoY to Rs 2,855 crore, from Rs 2,066 crore a year-ago. LIC's solvency ratio improved to 2.35 as of September 2026, from 2.13 a year earlier. However, the ratio declined sequentially from 2.42 in the June quarter. The insurer's expense of management ratio improved to 10.26% from 12.05% a year earlier, reflecting better cost efficiency.


Also read | LIC Q2 Results: Profit jumps 20% YoY to Rs 12,115 crore, NPI grows 16%

Should you buy, sell or hold LIC shares?

Jefferies on LIC share price

Jefferies maintained its ‘Buy’ rating on the shares of LIC but reduced its target price to Rs 510 apiece from Rs 530 apiece. The latest target price implies 25% upside potential from the stock’s previous closing price.

The international brokerage noted that the company’s Value of New Business (VNB) missed estimates due to lower APE and VNB margin. It cut the company’s VNB estimate for FY28-29 by 3% to reflect lower yield curve benefits. However, it listed reasons why it maintained ‘Buy’ rating on the shares of LIC.

Firstly, Jefferies believes that LIC could benefit from distribution reforms, as the company meets proposed EOM thresholds. Secondly, the insurance behemoth has a higher sensitivity to equity market moves. And finally, an improving product mix is driving Jefferies’ bullish call for LIC shares.

Other brokerages on LIC share price

Systematix Institutional Equities maintained its ‘Buy’ rating on the shares of LIC and increased its target price to Rs 470 apiece from Rs 460 apiece. The latest target price implies more than 15% upside potential from the stock’s previous closing price.

The brokerage noted that the insurance behemoth’s calculated value of new business (VNB) jumped 17% to Rs 37 billion, which however was 11% below its estimate. The VNB margin expanded by 249 bps YoY to 21.8% but was down by 109 bps QoQ. Sequentially there was a positive impact of a better product mix but change in RFR had a negative impact on margin of around 120 bps.

Group business continued to report healthy growth, supported by traction in group annuity and other products, Sytematix noted, highlighting that the company’s management expects APE growth to improve in in the second half of FY27, supported by a recovery in ULIPs, continued traction in non-par savings and protection, and recently launched products.

Also read | Life Insurance Corp of India reports higher premium income in H1, net profit rises around 22%

Antique Stock Broking maintained its ‘Buy’ rating but reduced its target price to Rs 510 apiece from Rs 530 apiece. The latest target price still implies 25% upside potential. The brokerage noted that the company’s VNB was 11% below its estimate as APE growth slowed to 3.8% YoY.

LIC’s management remains confident of individual APE growth in FY27, led by the October launches (deferred annuity and health), term and a ULIP recovery, and sees further margin improvement from mix, higher ticket sizes and cost efficiency, the brokerage added.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.