AUM Capital Market Private Limited has reiterated its bullish stance on Life Insurance Corporation of India, issuing a strong BUY recommendation on the back of robust H1FY26 results and impressive strategy execution. The research report outlines LIC's powerful industry positioning, operational gains, and ambitious product mix transformation as key driving forces for future growth. The firm sets an assertive target price of Rs 1,266 over the next 9–12 months, bolstered by LIC’s enduring market leadership, margin enhancement, and dynamic distribution expansion.

Summary of the Investment Thesis

Life Insurance Corporation of India stands as India's life insurance behemoth, notching up 63.44% and 59.41% market share in policies and premiums, respectively. In H1FY26, LIC’s Assets Under Management soared past Rs 57.23 lakh crore, while the firm aggressively ramped up its non-par product share for improved profitability. Notably, the company’s persistent innovation in its product portfolio—as well as a pioneering push into bancassurance and digital channels—has fortified both its industry stature and shareholder value. The analysis foregrounds LIC's full-spectrum transformation and efficiency drive, making a compelling case for portfolio inclusion at a target of Rs 1,266 within a one-year horizon.

Dominant Market Position and Massive AUM

LIC commands an almost unrivaled 63.44% share measured by First Year Premium Income per IRDAI records, dwarfing competitors with 57.23 lakh crore in assets under management. The group continues to consolidate its supremacy across individual and group business segments—recording a 72.74% group business share in Q2FY26—while its agency cadre of 1.4 million remains the largest in the sector. This scale and reach anchor the stability behind LIC’s forward guidance and resilience in volatile climates.

Strategic Product Mix Transformation

The company’s focus on high-margin, non-participating products has intensified, boosting the share of annual premium equivalent (APE) for these offerings from 26.31% in H1FY25 to 36.31% in H1FY26. This decisive tilt expands LIC’s value of new business (VNB) margin to 17.6%, up 140 basis points year-over-year, and sets the stage for margin accretion through continued product innovation and customer-targeted launches like Jeevan Kiran and LIC Yuva Term.

Robust Operational and Financial Performance

EPS reached Rs 15.97 in Q2FY26, marking a 30.69% increase, while consolidated net profit surged 30.66% to Rs 10,098.48 crore. Meanwhile, operational efficiency was underscored by a drop in the expense ratio by 146 bps and a notable improvement in asset quality, with gross NPA declining to 1.34% from 1.72% year-on-year. Policy persistency ratios at the 61st month jumped, reflecting greater customer retention and trust in LIC’s brand. The company also announced a dividend of Rs 12 for FY25, reinforcing its shareholder-friendly policy.

Bancassurance Push and Alternate Channel Growth

Distribution continues its evolution, with bancassurance and alternate channels growing their stake in individual new business premium to 7.87%, up from 4.67% last year. New partnerships with institutions like RBL Bank and IDFC FIRST Bank are expanding access, while digital enablement efforts through apps and omnichannel strategies optimize agent productivity. This multi-channel framework drives premium collection and broadens market penetration.

Strategic Expansion, Diversification, and Health Insurance Foray

LIC is pursuing inorganic expansion, including a possible acquisition of a standalone health insurer to mark its entry into the burgeoning health segment. Targeted demographics, tailored products for youth and rural segments, as well as international outreach initiatives, highlight LIC’s drive to enhance share in previously untapped geographies. Projects like Jeevan Samarth and DIVE aim to digitize agent networks and customer service, reinforcing the company’s retention and acquisition strategies.

Investment Yield Maximization and Portfolio Safety

Conservative asset allocation remains pivotal, with 75% of premiums invested in government securities, ensuring prudent stewardship of policyholder funds. Balanced exposure to equities and infrastructure complements sectoral diversification. LIC’s commitment to maximizing investment yields within regulatory guidelines promises long-term stability and sustainable returns for stakeholders.

Financials at a Glance

Shareholding: Promoters retain 96.5%, with institutions at 1.48% and public at 2.02%, ensuring significant promoter confidence.

Technical Levels and Target for Investors

LIC is currently priced at Rs 902.85, with a recommended BUY level. Support lies near Rs 715, and resistance tops Rs 1,007.70, as observed in its 52-week high-low range. The target is Rs 1,266 for the next 9–12 months, suggesting substantial upside potential. Investors seeking stability combined with robust growth may consider accumulations toward this target.

Bottomline: Why LIC Merits a BUY Call

LIC offers a foundational holding for investors, backed by strong financial metrics, an assertive non-par product strategy, expansionary distribution, and conservative risk management. With strategic transformation under way and visible operational efficiency, LIC offers a rare mix of sectoral leadership, growth visibility, and defensive characteristics.