The Life Insurance Corporation of India (LIC) shares climbed nearly 5% in intra-day trade after the state-run insurer announced strong Q4FY26 earnings, its first-ever 1:1 bonus issue, and a final dividend of Rs 10 per share.

The stock is in focus after the company posted a 23% year-on-year rise in consolidated net profit in Q4FY26. Profit stood at Rs 23,467 crore compared to Rs 19,039 crore in the same quarter last year. Moreover, the net premium income increased 12% year-on-year to Rs 1.65 lakh crore.

Bonus issue and dividend 

LIC announced a 1:1 bonus issue, under which shareholders will receive one fully paid-up equity share of Rs 10 each for every one existing fully paid-up share held.

The company has fixed May 29 as the record date to determine eligible shareholders for the bonus issue. 

Proposed final dividend Rs 10

In addition to this, LIC also declared a final dividend of Rs 10 per share for FY26, with June 25 fixed as the record date for dividend eligibility.

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Following the results, the brokerage house JM Financial has retained its ‘Buy’ rating on the stock. Let’s take a look at the brokerage’s view on the stock and the rationale behind its outlook-

JM Financial raises target price on LIC

JM Financial has raised its target price to Rs 960 from Rs 888 earlier. This implies an upside potential of nearly 20% from the current market price.

According to the brokerage report, improving product mix, higher-ticket policies, and gradual expansion in non-participating products are supporting LIC’s profitability profile.

JM Financial stated, “With a solid outlook, we raise our target price to Rs 960, valuing the corporation at 0.6x Mar’28 Embedded Value Per Share.”

Q4 FY26 performance recap

LIC reported healthy growth across both individual and group businesses during the quarter.

JM Financial noted, “LIC reported strong results for Q4FY26 – individual Annualised Premium Equivalent grew by 16%, higher than reported Retail Weighted Received Premium growth of 13%, and group Annualised Premium Equivalent rose by 37%.”

The brokerage further highlighted that total Annualised Premium Equivalent growth came in at 22% during the quarter.

As per the report, the insurer’s Value of New Business margin stood at 21.2% for FY26, implying a 24.9% margin during the March quarter.

Improving product mix supporting margins

One of the key reasons behind the brokerage’s positive outlook is LIC’s improving margin profile.

According to the report, the company’s Value of New Business margin expanded by 360 basis points year-on-year during FY26.

JM Financial said, “Strong margin aided by an improving product mix and favourable macros.”

The brokerage noted that nearly 300 basis points of the margin improvement came from a favourable product mix, while economic assumptions also contributed positively.

According to JM Financial, LIC’s Value of New Business margin in the individual business segment has now crossed 26%.

Growth visibility remains steady

The brokerage also expects steady growth in LIC’s core business over the next few years.

As per the report, LIC delivered 13% growth in individual Annualised Premium Equivalent and 27% growth in group business during FY26.

JM Financial expects the company to maintain around 10–12% growth in individual Annualised Premium Equivalent going forward.

The brokerage stated, “We expect LIC to report steady 11-12% operating Return on Embedded Value.”

According to the report, Embedded Value is expected to compound at nearly 14% annually between FY26-28.

Valuation comfort and long-term outlook

JM Financial believes LIC’s current valuation remains reasonable compared to its long-term growth outlook.

The brokerage stated, “Diversifying product mix with improving margins augurs well for LIC, providing resilience to growth.”

The report also highlighted that LIC’s strong balance sheet, large distribution reach and improving profitability trends continue to support its medium-term outlook.

However, the brokerage noted that LIC’s Embedded Value remains sensitive to equity market movements, which could create near-term volatility depending on broader market conditions.

Disclaimer: The market data and brokerage target prices mentioned above are for informational purposes only and do not constitute an offer, solicitation, or recommendation to buy, sell, or hold any security. Investing in equity markets involves risks, and individual financial circumstances vary; readers are advised to consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.