LIC Q2 Preview: APE Dropping Up to 10% YoY on High Base, but Margin Stability Offers Comfort
LIC is scheduled to release its September quarter results this Thursday. As India’s leading life insurer, Life Insurance Corporation of India (LIC) is projected to experience a decrease of up to 10% year-on-year in its Annual Premium Equivalent (APE), a critical sales metric. Estimates from various brokerages suggest the APE will range between Rs 14,840 crore and Rs 16,380 crore.
Key Financial Highlights to Monitor
1. Annual Premium Equivalent (APE)
– Most expect a slight decline in APE due to a high base effect and subdued new business momentum:
– Kotak Equities: Rs 16,380 crore (down 0.5% YoY, up 29% QoQ)
– Emkay Research: Rs 15,710 crore (down 4.6% YoY)
– YES Securities: Rs 14,840 crore (down 10% YoY, up 17% QoQ)
– Centrum Broking: Rs 16,213 crore (down 1.5% YoY, up 28% QoQ)
2. Value of New Business (VNB)
– Forecasts indicate varying outcomes for VNB:
– Kotak Equities: Rs 2,844 crore (down 3.3% YoY, up 46% QoQ)
– YES Securities: Rs 2,374 crore (down 19% YoY, up 22% QoQ)
– Centrum Broking: Rs 3,018 crore (up 3% YoY)
– Emkay Research: Rs 2,821 crore (down 4.1% YoY)
3. VNB Margin
– Expected fluctuations in margins across brokerages:
– Kotak Equities: Margin of 17.4% (down 50 bps YoY)
– Centrum Broking: 18.6% (up 82 bps YoY)
– Emkay Research: Pegged at 18% (up 10 bps YoY)
4. New Business Premium (NBP)
– Estimates show a steady NBP at Rs 58,677 crore, projected to rise 1% YoY.
5. Assets Under Management (AUM)
– Projected AUM is Rs 58.93 lakh crore (up 6.4% YoY), bolstered by positive inflows and market performance.
6. Profit After Tax (PAT)
– Emkay Research estimates PAT at Rs 8,198 crore (up 7.6% YoY).
7. Key Monitorables
– Investors should focus on:
– Non-part product expansion
– Impact of GST ITC disallowance on margins
– Growth trends in the group and retail APE segments
In conclusion, while LIC’s APE may see a decline due to a high base effect, its stable margins and ongoing shifts towards higher-margin products may provide some reassurance to investors. The results will be closely watched for insights into the company’s evolving business dynamics and performance metrics.