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LICI: Future Stake Sales And Richer P E Multiple Will Drive Rerating

India's Middle Class And Digital Platforms Will Expand Market Access

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LICI
AnalystHighTarget
Not Invested
Published 01 Jun 2025
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Update shared on 01 Mar 2026

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Analysts have raised their price target on Life Insurance Corporation of India to ₹1,408, citing slightly higher revenue growth expectations and a richer future P/E assumption, while projected profit margins remain broadly unchanged.

What's in the News

  • The government is considering further reducing its 96.5% stake in Life Insurance Corporation of India through a follow-on public offering, with timing, quantum and pricing to be decided later. Officials have indicated this could be taken up in the next financial year if approvals and market conditions allow (Financial Services Secretary M Nagaraju, Feb 2, 2026).
  • The government is required to sell an additional 6.5% stake in LIC by May 2027 to meet the mandated 10% public shareholding requirement, with the Department of Investment and Public Asset Management asked to examine options for stake dilution.
  • LIC has scheduled a board meeting on February 5, 2026 to consider and approve its unaudited standalone and consolidated financial results for the quarter and nine months ended December 31, 2025.
  • The union government and LIC together plan to sell a 60.72% stake in IDBI Bank, valued at nearly $7,000m at current market prices. Fairfax Financial Holdings and Kotak Mahindra Bank have been identified as the two remaining contenders in the privatisation process (The Economic Times report).

Valuation Changes

  • Fair Value: Model fair value remains unchanged at ₹1,407.73.
  • Discount Rate: Held steady at 12.48%, indicating no revision to the required return assumption.
  • Revenue Growth: Revenue growth assumption has risen slightly from 16.41% to 16.52%.
  • Net Profit Margin: Net profit margin assumption is broadly stable at 4.96%.
  • Future P/E: Future P/E multiple has increased from 19.84x to 24.26x, indicating a higher valuation assumption.

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