LIC shares get a double upgrade from JPMorgan but target is below previous highs

Brokerage firm JPMorgan has issued a double upgrade for Life Insurance Corporation of India (LIC) Ltd., India's largest insurance company, after it reported its September quarter results last week.

JPMorgan has double-upgraded LIC to "overweight" from its earlier rating of "underweight" and raised its price target to ₹1,075 from ₹790 earlier.

The revised price target implies a potential upside of 16% from Monday's closing levels of LIC. The stock has corrected nearly 25% from its record high level of ₹1,222, which the stock had hit in February this year.

JPMorgan's price target though, is below LIC's record high levels. Six out of the 21 analysts that have coverage on LIC have recommended a price target that is higher than LIC's recent high.

The brokerage cited strong growth in its Value on New Business due to an enhanced product mix and expects that to sustain going forward.

JPMorgan has revised LIC's Value of New Business (VNB) for financial year 2025 and 2026 by 9% and 11% respectively.

LIC continues to outweigh the negative impact from higher product benefits and lower bond yields, according to JPMorgan.

Out of the 20 analysts that have coverage on LIC, 15 of them have a "buy" rating on the insurance major, followed by four others, who have a "hold" rating, while Ambit has a "sell" call on the stock.

LIC does not have significant public float, as the government only sold 3.5% stake in the company during its IPO, which was India's largest till date, before being overtaken by Hyundai recently.

The government continues to hold a 96.5% stake in LIC, while there are no plans of any further stake sale in the offing, at least in the near-term.

Shares of LIC are currently trading 2.1% higher at ₹937.65. The stock is up 9% so far in 2024.