Synopsis: LIC posted a strong year-on-year performance with solid profit growth and margin expansion, but sequential weakness kept investors cautious. Is this the right moment to bet on the insurer?
The insurance sector heavyweight saw its shares edge higher after posting healthy year-on-year growth in profitability, supported by improving value of new business and margin expansion. However, muted sequential performance and a fall in policy count kept investors cautious.
Life Insurance Corporation of India (LIC), with a market capitalisation of Rs. 5,68,996.79 crore, opened at Rs. 909.05 after a previous close of Rs. 895.45. The stock touched an intraday high of Rs. 916.40, marking a 2.34 percent rise from the previous close.
Financial Snapshot – Q2FY26
For the quarter ended September 2025 (Q2FY26), LIC reported revenue of Rs. 2,41,524 crore, rising 7.52 percent sequentially from Rs. 2,24,671 crore in Q1FY26. However, operating profit declined 9.36 percent quarter-on-quarter to Rs. 9,492 crore from Rs. 10,474 crore, while the operating margin contracted from 5 percent to 4 percent. Profit before tax fell 6.36 percent to Rs. 10,537 crore from Rs. 11,253 crore, and net profit dipped 7.83 percent to Rs. 10,096 crore from Rs. 10,955 crore. Earnings per share decreased from Rs. 17.32 to Rs. 15.97.
On a year-on-year basis, total revenue grew 4.49 percent from Rs. 2,31,132 crore in Q2FY25 to Rs. 2,41,524 crore in Q2FY26. Operating profit surged 44.07 percent to Rs. 9,492 crore from Rs. 6,588 crore, with the operating margin improving to 4 percent from 3 percent a year ago. Profit before tax rose 42.74 percent to Rs. 10,537 crore from Rs. 7,382 crore, while net profit advanced 30.73 percent to Rs. 10,096 crore from Rs. 7,723 crore. EPS stood at Rs. 15.97, up 30.72 percent from Rs. 12.22 in the year-ago period.
Key Highlights
During the first half of FY26, LIC’s individual new business premium income stood at Rs. 28,491 crore, a decline of 3.54 percent year-on-year. However, individual renewal premium income grew 6.14 percent to Rs. 1,22,224 crore, driving the total individual business premium higher by 4.16 percent to Rs. 1,50,715 crore. Group business premium increased 6.73 percent to Rs. 94,965 crore, underlining steady growth in institutional segments.
On an annualized premium equivalent (APE) basis, total premium stood at Rs. 29,034 crore, with 59.14 percent contributed by the individual business. Within this, the non-par APE segment registered a sharp 30.47 percent growth to Rs. 6,234 crore, increasing its share to 36.31 percent from 26.31 percent a year earlier.
The value of new business (VNB) rose 12.30 percent to Rs. 5,111 crore, and the Net VNB margin expanded by 140 basis points to 17.6 percent. LIC’s Indian Embedded Value (IEV) marginally declined 1.03 percent year-on-year to Rs. 8,13,230 crore. The solvency ratio strengthened to 2.13 versus 1.98 last year, while assets under management increased 3.31 percent to Rs. 57,22,896 crore. Persistency ratios on a premium basis for the 13th and 61st months stood at 75.29 percent and 63.81 percent, respectively. The overall expense ratio fell 146 basis points to 11.28 percent, reflecting better cost optimization.
Comments from the Shri R Doraiswamy, CEO & MD, LIC
On GST Impact and Customer Benefits
“We at LIC are very optimistic about the positive impact of the GST changes announced for the Insurance Industry by the Government of India during September 2025. It is our firm belief that these changes are in the best interest of customers and will lead to further accelerated growth of the life insurance industry in India. As LIC we have ensured that all intended benefits of GST changes are passed onto the customers.”
On Cost Optimization and Efficiency
“While we expand our overall profitability through diversified product mix and channel mix, we are also working towards optimizing costs and for H1 FY26 our overall expense ratio has decreased by 146 bps to 11.28%.”
On Long-Term Vision and Industry Leadership
“As the leader of the life insurance industry in India, we are aware of our responsibility to enhance both insurance penetration and density and continue to focus our efforts and channel our energies into achieving ‘Insurance for All by 2047’.”
Analysts’ View
Citi has maintained a Buy rating on LIC while trimming its target price to Rs. 1,345 from Rs. 1,370, implying a potential upside of 50.2 percent from the previous close of Rs. 895.45. The brokerage noted that the quarter remained operationally strong with consistent improvement in product mix and profitability. Despite higher ULIP exposure in non-savings products, VNB margin expanded 145 basis points year-on-year. Analysts highlighted that LIC’s management has not indicated any major impact from the withdrawal of ITC benefits, and reiterated that stabilization in the individual annualised premium equivalent (APE) market share will be critical for a future re-rating.
-Manan Gangwar
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