LIC shares plunge on lower Q4 profit. A buy on dip opportunity?
Premium- LIC shares declined more than 2% in Tuesday's opening deals on the BSE
Shares of Life Insurance Corporation of India (LIC) plunged more than 2% in Tuesday's opening deals at ₹817 apiece on the BSE after the state-run insurance behemoth reported lower profit for the fourth quarter ending March 2022.
In its first earnings release post shares listing, LIC posted a 17% decline in consolidated net profit to ₹2,409 crore for Q4 from ₹2,917 crore in the same quarter a year ago. The total income of the insurer increased to ₹2,12,230 crore, from ₹1,90,098 crore in the same period of the previous fiscal year.
LIC's net premium income rose to ₹1.44 trillion from ₹1.22 trillion year-on-year (YoY). Its solvency ratio, a measure of an insurer's ability to meet its long-term debt obligations, rose to 1.85 from 1.76 a year earlier. LIC said its asset base grew 12% to ₹41.8 trillion in FY22 from ₹37.4 trillion in FY21.
India's biggest insurer and largest domestic financial investor also announced a dividend of ₹1.50 per share with a face value of ₹10 each, which is subject to shareholders’ approval at its upcoming annual general meeting (AGM).
“Despite a dip in Q4 net profit, LIC is a quality stock with strong fundamentals. Its solvency ratio rose, however, 13-month persistency ratio fell during the fourth quarter. Investors may wait for some more dip and initiate accumulating around ₹750 levels," said Ravi Singh, Vice President and Head of Research, Share India.
“LIC shares on Tuesday's intraday trade after it reported a decline in consolidated net profit in the Q4. Investors can do a buy at dip strategy and accumulate this brand with a long term perspective," suggested Manoj Dalmia, Founder & Director at Proficient Equities.
Earlier this month, the government raised ₹20,557 crore by diluting its 3.5 per cent stake in the LIC through the initial public offering (IPO), the country's biggest ever. LIC shares, that made market debut on May 17, 2022, are down more than 15% from its IPO issue price.
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