LICI - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.3
| Stock Code | LICI | Market Cap | 5,28,569 Cr. | Current Price | 837 ₹ | High / Low | 980 ₹ |
| Stock P/E | 10.3 | Book Value | 223 ₹ | Dividend Yield | 1.43 % | ROCE | 53.4 % |
| ROE | 46.0 % | Face Value | 10.0 ₹ | DMA 50 | 844 ₹ | DMA 200 | 873 ₹ |
| Chg in FII Hold | 0.07 % | Chg in DII Hold | -0.02 % | PAT Qtr | 10,053 Cr. | PAT Prev Qtr | 10,987 Cr. |
| RSI | 53.8 | MACD | -9.48 | Volume | 24,31,330 | Avg Vol 1Wk | 10,77,701 |
| Low price | 715 ₹ | High price | 980 ₹ | PEG Ratio | 0.08 | Debt to equity | 0.00 |
| 52w Index | 46.1 % | Qtr Profit Var | 31.9 % | EPS | 80.8 ₹ | Industry PE | 81.6 |
📊 Analysis: LIC trades at ₹837 with a very attractive P/E of 10.3 compared to the industry average of 81.6, suggesting undervaluation. ROE (46.0%) and ROCE (53.4%) are exceptionally strong, indicating superior efficiency in generating returns. Dividend yield of 1.43% adds income appeal. The PEG ratio (0.08) highlights strong earnings growth relative to valuation. Technical indicators (RSI 53.8, MACD -9.48) suggest neutral-to-slightly bearish momentum, but fundamentals remain robust. PAT has declined sequentially (10,987 Cr. → 10,053 Cr.), yet overall profitability is strong.
💡 Entry Price Zone: Ideal entry would be between ₹800–₹820, closer to support levels and below DMA 200 (₹873), offering better valuation comfort.
📈 Exit / Holding Strategy: If already holding, this is a solid long-term candidate (5+ years) given strong ROE, ROCE, and low valuation. Exit strategy should be considered only if price sustains below ₹780 or if profitability metrics weaken significantly. Otherwise, continue holding for compounding returns and dividend income.
✅ Positive
- Exceptionally strong ROE (46%) and ROCE (53.4%).
- Low P/E (10.3) vs industry average (81.6), indicating undervaluation.
- Healthy dividend yield (1.43%).
- Debt-free balance sheet (Debt-to-equity 0.00).
⚠️ Limitation
- Sequential decline in PAT (10,987 Cr. → 10,053 Cr.).
- Stock trading below DMA 200, showing weak short-term momentum.
- 52-week index at 46.1%, indicating mid-range performance.
📉 Company Negative News
- Slight reduction in DII holdings (-0.02%).
- Sequential decline in quarterly profits.
📈 Company Positive News
- FII holdings increased (+0.07%), showing foreign investor confidence.
- EPS at ₹80.8, reflecting strong earnings power.
- Quarterly profit variation of 31.9% YoY growth.
🏭 Industry
- Insurance sector has long-term structural growth driven by rising penetration in India.
- Industry P/E at 81.6 highlights LIC is trading at a deep discount compared to peers.
🔎 Conclusion
LIC is fundamentally strong with high ROE, ROCE, and undervaluation relative to industry peers. It is a good candidate for long-term investment. Best strategy: accumulate between ₹800–₹820 and hold for 5+ years to benefit from compounding and dividend income. Existing holders should continue holding unless profitability weakens significantly.