1. At a Glance
LIC is still the Big Boss of Indian insurance, with a 66%+ market share in premiums and 68% in policies. But the old warhorse is under pressure—from private insurgents and its own complexity. Is LIC the value trap… or a sleeping giant?
2. Introduction with Hook
If the Indian insurance sector were an IPL match, LIC is that 40-year-old player with 50,000 runs, 3 knee surgeries, and still opening the innings.
- Largest life insurer in India with ₹5.87 lakh crore market cap.
- 68.7% market share by number of policies (H1 FY25).
- ROE of 46%. And yes, that’s higher than many tech startups’ revenue growth.
But here’s the twist: while profits are booming, revenues are crawling like a turtle in molasses.
3. Business Model (WTF Do They Even Do?)
Let’s decode the 800-pound gorilla.
Participating Products: Policyholders share in the profits (aka the bhai-bandhu model).
Non-Participating Products: Fixed benefits, no profit-sharing.
- Term Insurance
- ULIPs
- Annuities
- Health Insurance
Plus, LIC is India’s largest asset manager (₹50+ lakh crore AUM). Also a mega shareholder in half of NSE 500 companies. Basically, LIC is part insurer, part mutual fund, part government’s piggy bank.
4. Financials Overview
| Metric | FY25 | FY24 | FY23 |
|---|---|---|---|
| Sales | ₹8.89 L Cr | ₹8.45 L Cr | ₹7.85 L Cr |
| Net Profit | ₹48,320 Cr | ₹40,916 Cr | ₹35,997 Cr |
| OPM | 6% | 4% | 4% |
| ROE | 46% | 65% | 63% |
| EPS | ₹76.4 | ₹64.7 | ₹56.9 |
Takeaway:
After a bumpy start post-IPO, LIC’s profitability has skyrocketed. FY25 net profit grew 18%, riding on better underwriting and bumper investment returns. But revenue growth? Meh. ~5% CAGR.
5. Valuation
At ₹928, LIC trades at:
- P/E = 12.2
- P/B = 4.6
- Dividend yield = 1.29%
Valuation Methods Used:
- P/E multiple: Applying 15x on FY25 EPS of ₹76 = ₹1,140
- Embedded Value-based: EV ~₹6 lakh Cr, with 1.2x multiple = ₹1,200
- DCF: Considering cash flows from premiums and investment returns → FV ~₹950–₹1,150
EduFair Value Range:
₹950 to ₹1,150
Undervalued? Maybe. Understood? Never.
6. What’s Cooking – News, Triggers, Drama
- New CEO Alert: R. Doraiswamy appointed as MD & CEO (July 2025). New captain of the Titanic… let’s hope he’s not rearranging deck chairs.
- Auditor Overhaul: New auditors from FY26–FY30. Could bring transparency or open old wounds.
- Privatization Rumors: Always buzzing. The government still owns 96.5%, but every Budget brings new gossip.
- IRDAI Reforms: Reduction in promoter stake rules = pressure on GOI to dilute LIC. Long-term re-rating trigger?
7. Balance Sheet
| Item | FY25 | FY24 | FY23 |
|---|---|---|---|
| Equity Capital | ₹6,325 Cr | ₹6,325 Cr | ₹6,325 Cr |
| Reserves | ₹1.21 L Cr | ₹76,422 Cr | ₹39,908 Cr |
| Borrowings | ₹1 Cr | ₹0 | ₹0 |
| Investments | ₹53.1 L Cr | ₹49.7 L Cr | ₹42.4 L Cr |
| Other Liabilities | ₹55.3 L Cr | ₹52.3 L Cr | ₹45.3 L Cr |
Key Points:
- LIC is debt-free. Yes, zero borrowings.
- Massive reserves growth = Profit hoarding? Or capital buffer?
- Largest investment book in India, spread across equity and debt. Basically, LIC sneezes, the Sensex gets a cold.
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Flow |
|---|---|---|---|---|
| FY25 | -₹9,145 Cr | ₹40,423 Cr | -₹3,794 Cr | ₹27,484 Cr |
| FY24 | ₹26,122 Cr | -₹25,269 Cr | -₹4,427 Cr | -₹3,574 Cr |
Key Points:
- Cash flow from ops is volatile—thanks to insurance working capital cycles.
- Investing cash flows reflect asset reshuffling.
- Healthy cash buffer remains, aided by unrealised equity gains.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 | FY24 | FY23 |
|---|---|---|---|
| ROCE | 53% | 73% | 144% |
| ROE | 46% | 65% | 63% |
| EPS | ₹76.4 | ₹64.7 | ₹56.9 |
| Dividend Yield | 1.29% | 1.0% | 0.5% |
Verdict:
Sexy, if you like old-school value with a public sector soul. Stressy, if you want growth, agility, or tech upgrades.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | Expenses | OPM | Net Profit |
|---|---|---|---|---|
| FY25 | ₹8.89 L Cr | ₹8.37 L Cr | 6% | ₹48,320 Cr |
| FY24 | ₹8.45 L Cr | ₹8.13 L Cr | 4% | ₹40,916 Cr |
| FY23 | ₹7.85 L Cr | ₹7.50 L Cr | 4% | ₹35,997 Cr |
Key Highlights:
- Margins improved despite tepid revenue.
- Expense control + capital gains = the LIC hack.
- Profit CAGR >75% in last 5 years.
11. Peer Comparison
| Company | CMP | P/E | ROE | Net Profit | Sales | OPM |
|---|---|---|---|---|---|---|
| LIC | ₹928 | 12.2 | 46% | ₹48,320 Cr | ₹8.89 L Cr | 6% |
| SBI Life | ₹1,802 | 74.9 | 15% | ₹2,413 Cr | ₹1.17 L Cr | 1.1% |
| HDFC Life | ₹751 | 86.1 | 10.8% | ₹1,880 Cr | ₹99,451 Cr | 0.9% |
| ICICI Pru | ₹643 | 73.6 | 10.3% | ₹1,262 Cr | ₹70,783 Cr | 1.7% |
Conclusion:
LIC dwarfs peers on absolute scale, but gets dwarfed in valuation multiples. Why? PSU tag + complexity + opaque valuation models.
12. Miscellaneous – Shareholding, Promoters
| Holder | Stake |
|---|---|
| Promoters (GoI) | 96.5% |
| FIIs | 0.10% |
| DIIs | 1.27% |
| Public | 2.13% |
FYI:
- Lowest FII stake among listed insurers.
- Retail count falling = confidence issues?
- Disinvestment overhang likely. Any stake sale can move the stock sharply.
13. EduInvesting Verdict™
LIC is like that old physics professor who looks sleepy but can solve quantum equations in his head. You just don’t mess with him. The company has turned in stellar profits, improved margins, and stable balance sheets.
But…
- Growth is sluggish.
- Valuation is a mystery even Sherlock would fear.
- PSU overhang looms large.
If you want alpha in sandals, LIC is your best bet. If you want Tesla vibes, look elsewhere.
Metadata
– Written by EduInvesting Analyst Team | 18 July 2025
– Tags: LIC, Life Insurance, PSU, Deep Value, Insurance Stocks, ROE Kings, Government-Owned Giants, Valuation Mystery
