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Macquarie’s note highlighted the key aspects of LIC’s performance. “LIC reported 4Q FY25 value of new business of Rs 3,529 crore, down 3% year-on-year, driven by lower-than-expected APE growth.” It further added that the annual premium equivalent growth was muted, primarily due to the implementation of new surrender value regulations.
Despite the challenges, LIC’s solvency ratio improved to 2.11% from 1.98%, indicating better financial health. “Value of New Business margins improved 154 basis points year on year, primarily because of increasing non-par mix and lower cost ratios,” Macquarie noted.
The brokerage also pointed out that while there is some margin cushion given a high ULIP base, margin trends in the par book remain a key monitorable.
The valuation support for LIC remains strong despite downside risks to VNB estimates. “We continue to see a value proposition in the stock, given the strong valuation support,” Macquarie reiterated. The stock trades at 0.7 times trailing Enterprise Value and at a negative Value of New Business multiple, providing a safety net for investors.
“Management was non-committal about giving margin guidance for FY26E,” the brokerage noted.
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