Cheap valuation likely to lend support to LIC amid weak performance

Policies that provide policyholders a share of the insurance company's profits as an annual dividend payout are also called par or with-profit policies

Life Insurance Corporation of India (LIC) reported weak growth through H1FY24 but it witnessed a boost in embedded value (EV) due to equity-market performance. But concerns regarding its stock include loss of market share as it is outpaced by private sector rivals, sticky operating expenses (reduced slightly year-on-year but up in Q2FY24 versus Q1FY24), and high sensitivity of embedded value to equity volatility.

Traders may also factor in the likelihood of another stake sale by the Government of India. These concerns are reflected in valuations. LIC trades at a big discount in price/EV terms (less than 1x) compared to private