Over the past one year, the stock price of Life Insurance Corporation (LIC), the state-owned market leader, and the most dominant player in the segment, has yo-yoed between just over `1,000 and `700. On September 24, it closed just below `900, with an uptick since March this year, and a slight fall since then. According to a media report a fortnight ago, its equity investment portfolio incurred significant mark-to-market losses, driven by broader market sell-offs and sharp declines in some of its major holdings.
LIC, which uses its huge cash flows to invest in stocks, largely large-caps or big companies, and acts as a market stabiliser during volatile times, witnessed downward trends in more than 70 per cent of the stocks in its portfolio during the past year. Some of the shares were down by up to 70 per cent during the same period. According to public data, some of its largest holdings, as on June 30, 2025, included Vodafone-Idea! (53 billion shares worth `45,000 crore), Avanti Feeds (33 million shares; more than `2,200 crore), Mahindra and Mahindra Financial Services (142 million; `4,000 crore), and Indraprastha Gas (132 million; `2,700 crore).
Of these, Vodafone-Idea!, which was inching towards `11 per share, is down below `9, with the lowest valuation of just above `6 in August 2025. Avanti Feeds was over `900 in March 2025, and is down to below `700. Mahindra and Mahindra Financial Services was `330 a year ago, and is around `280. Indraprastha Gas fluctuated between a high of `285 and low of `150 over the past 52 weeks, and is now just above `200. The current price is closer to its ex-bonus price of `199 on January 31, 2025.
There was huge enthusiasm for the LIC stock, when the Government listed it through an IPO (Initial Public Offering). The issue price was `949, with a discount of `60 for policyholders, and `45 for employees and retail investors. The current price is below the discounted prices, although it was quoted at `1,180 in August 2024. Since then, the stock has been on a steady downward path. In the past few weeks, due to the expectations and announcement of zero GST tax on life and health insurance policies, the stock moved up.
According to a recent research report by Emkay, the life insurance segment reported a weak performance during August 2025, with retail APE (Annualised Premium Equivalent) declining 0.6 per cent, largely due to LIC reporting a 5.1 per cent YoY (Year-on-Year) decline. This was partially offset by the performance of private players, who collectively posted a muted 1.3 per cent growth.
“The lackluster growth in August 2025 was owing to continued impact of new surrender regulations driven by product and channel adjustments; Ganesh Chaturthi-led festivities impacting the business in the western and central parts of India, and; floods in northern India,” felt the analysts at Emkay. However, the industry’s retail APE grew 4.8 per cent in Year-to-Date FY26, primarily driven by more than eight per cent growth in the private sector. LIC remained a laggard, as it showed a 2.4 per cent decline.
“We expect the industry to deliver more than 11-12 per cent retail APE growth in FY26, backed by the private sector growing more than 13-14 per cent, and LIC expected to grow 6-7%,” noted the Emkay report. It added that while LIC is expected to post a positive retail APE growth, the weak performance is likely to continue till October 2025 (given the Diwali festivities and impact of GST changes).
In Q1-FY26, LIC reported net premium income of `1.19 trillion, up five per cent YoY, with absolute value of new business (VNB) rising 21 per cent YoY to Rs 19 billion, and VNB margin expanding to 15.4 per cent. Renewal premium grew six per cent YoY to `599 billion, and total assets under management climbed to Rs 57 trillion, up six per cent YoY. FY26E–27E projections from Motilal Oswal show net premiums of `5.18 trillion and `5.52 trillion, respectively, PAT (Profit After Tax) of `521 billion and `591 billion, respectively, and a steady rise in VNB margin to 18.5 per cent by FY27E.
Growth will be powered by a shift toward higher-margin non-participating products, which reached 30 per cent of individual APE in Q1-FY26, up from nine per cent in FY23. According to Motilal Oswal, LIC has kept its unrivalled agency network of more than 1.5 million agents intact. The company has tie-ups with 94 bancassurance partners, 295 brokers and 177 corporate agents.
Motilal Oswal stated in its report that commission expenses declined three per cent YoY to `49.5 billion, and operating expenses fell 10 per cent YoY to `75.5b, which resulted in expense management ratio of 10.5 per cent. Interest-rate sensitivity, as a larger non-par book, raises exposure to market yields. ICICI Securities notes a 10 per cent equity drop can cut the enterprise value by 6.7 per cent. Short-term weakness in the sales of individual policies remains a concern, which may be blunted by GST cuts.