LICI - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.3

📊 Core Financials

• Quarterly PAT at ₹10,053 Cr. vs ₹10,987 Cr. shows slight decline, but overall profit variation is +31.9% YoY.
• ROCE at 53.4% and ROE at 46.0% indicate exceptional efficiency and profitability.
• Debt-to-equity ratio at 0.00 highlights a debt-free balance sheet, ensuring strong financial health.
• EPS at ₹80.8 reflects robust earnings power.

💹 Valuation Indicators

• P/E Ratio: 10.5 (significantly below industry PE of 84.3, suggesting undervaluation).
• P/B Ratio: ~3.8 (CMP ₹852 / Book Value ₹223).
• PEG Ratio: 0.08 (extremely attractive, highlighting undervaluation relative to growth).
• Intrinsic Value: CMP appears undervalued, offering strong margin of safety.

🏢 Business Model & Competitive Advantage

• LIC is India’s largest life insurer with dominant market share and unparalleled brand trust.
• Competitive advantage lies in its extensive distribution network, government backing, and strong customer base.
• Focus on insurance penetration, digital adoption, and diversified product offerings supports long-term sustainability.

📈 Entry Zone & Long-Term Guidance

• Entry Zone: Attractive near ₹800–₹850 (close to DMA 200 at ₹889 and 52-week low ₹715).
• Long-Term Holding: Highly suitable for investors seeking undervalued insurance exposure with strong fundamentals.

✅ Positive

• Exceptional ROCE (53.4%) and ROE (46.0%) highlight efficiency and profitability.
• P/E at 10.5 is far below industry average, showing undervaluation.
• Debt-free balance sheet ensures financial stability.
• EPS of ₹80.8 demonstrates strong earnings power.

⚠️ Limitation

• Quarterly PAT declined slightly from ₹10,987 Cr. to ₹10,053 Cr.
• Dividend yield at 1.42% is modest compared to peers.
• Stock trading below DMA 50 & DMA 200, reflecting weak technical momentum.

📉 Company Negative News

• DII holdings reduced (-0.02%), showing cautious domestic sentiment.
• Short-term profit decline may affect near-term investor confidence.

📈 Company Positive News

• FII holdings increased slightly (+0.02%), showing foreign investor confidence.
• Strong brand trust and government backing continue to support long-term growth.

🏭 Industry

• Insurance industry benefits from rising penetration, financial awareness, and regulatory support in India.
• Industry PE at 84.3, showing LIC trades at a deep discount to peers.

🔎 Conclusion

LIC demonstrates exceptional fundamentals with high ROE/ROCE, debt-free balance sheet, and undervaluation compared to industry peers. Despite modest dividend yield and slight quarterly profit decline, the company’s dominant market position and strong brand trust make it a compelling long-term investment. Entry is advisable near ₹800–₹850 for better risk-reward. Long-term investors may benefit significantly from insurance sector growth and LIC’s unmatched scale.