LIC Q4 FY26 profit up 23%: bonus, dividend lift stock

Stock jumps after results

Shares of Life Insurance Corporation of India (LIC) climbed as much as 5% on May 22 after the state-owned insurer reported a sharp rise in quarterly profit. The move came as investors reacted to stronger profitability, higher new business metrics, and an improved solvency buffer. At 9:35 am on May 22, LIC was trading 2.5% higher at Rs 819.8 per share. The results also landed alongside corporate actions - a 1:1 bonus issue and a final dividend - that put additional focus on the stock.

Analysts had broadly expected a strong quarter, citing ongoing support to insurance demand after earlier GST changes. Reuters also noted that the Middle East conflict dented sentiment and hurt sales of market-linked products, even as overall demand stayed resilient. Against this backdrop, the reported numbers signalled improving mix and margins, led by higher contribution from non-participating products.

Q4 net profit rises year-on-year

LIC reported a 23% year-on-year rise in net profit for the March quarter. Reuters reported net profit at Rs 23,420 crore for the three months ended March 31, compared with Rs 19,013 crore a year earlier. Separately, LIC reported consolidated net profit of Rs 23,467 crore versus Rs 19,039 crore in the year-ago quarter.

While the two figures differ slightly between sources, both point to a similar year-on-year growth rate and a stronger quarter. The profit growth was also linked to momentum in group business and improved profitability from product mix.

Premium growth and a rebound in new business

Net premium income rose strongly in the quarter. Reuters reported net premium income growth of 11.5% year-on-year to Rs 165,000 crore (Rs 1.65 lakh crore). LIC reported net premium income of Rs 164,000 crore (Rs 1.64 lakh crore), up 11% from Rs 148,000 crore (Rs 1.48 lakh crore) a year earlier, and up 30% sequentially from Rs 126,000 crore (Rs 1.26 lakh crore) in the December quarter.

On new business, one-time premiums rose 21.5% and first-year premiums from new policies rose around 17%, as per Reuters. Annualised premium equivalent (APE) sales - a key measure of new business - rose nearly 22% to Rs 22,954 crore for the quarter, based on Reuters’ calculation. Reuters also noted that the APE rebound came after a weak year-ago period that was affected by regulatory changes that made surrendering policies easier.

Group business leads the momentum

A notable driver in the quarter was LIC’s group business. Reuters said group business APE rose 37% in the quarter, and noted that Emkay Global expected strong momentum in this segment.

On an earnings call, CEO and MD R Doraiswamy said there was good potential for growth in group business and that the growth is sustainable. He also flagged that ongoing market volatility could affect growth if commercial organisations face financial impact. The management commentary matters because group business can be sensitive to corporate cash flows and hiring cycles, even when retail demand remains steady.

Product mix shift lifts profitability

LIC continued to increase its focus on non-participating products, where policyholders do not receive profit-linked bonuses. This shift supported profitability and helped push margins higher.

Value of new business (VNB), which reflects expected profit from new policies, rose 67% to Rs 5,891 crore for the quarter, as per Reuters’ calculation. VNB margin stood at 21.2% as of March-end, compared with 17.6% a year earlier, supported by a higher contribution from non-participating products.

Solvency ratio improves to 2.35

LIC’s solvency ratio rose to 2.35 in the quarter from 2.11 a year earlier. The solvency ratio is a key metric in insurance, indicating the buffer available to meet long-term obligations. A higher ratio signals stronger capital adequacy, which can be especially relevant when insurers scale new business or experience market volatility.

LIC also reported assets under management (AUM) of Rs 5,729,396 crore in FY26, up 5.08% year-on-year, reinforcing its position as a large institutional investor in Indian markets.

Bonus issue and final dividend: key dates

LIC’s board approved a 1:1 bonus issue and announced a final dividend of Rs 10 per share for FY26. Under the bonus proposal, shareholders will receive one additional fully paid-up equity share of face value Rs 10 for every one existing fully paid-up equity share of face value Rs 10 held.

The company fixed May 29, 2026 as the record date for the bonus issue. As per the exchange filing, the deemed date of allotment of bonus shares is June 1, 2026. For the final dividend, LIC fixed June 25, 2026 as the record date.

Brokerages raise target prices after Q4

After the quarter, brokerages increased their target prices on LIC. JM Financial raised its target price to Rs 960 from Rs 888, citing a strong quarter and noting that total APE grew by 22% with group APE up 37%. It also highlighted a VNB margin of 21.2% for FY26 and said it raised its FY27/FY28E VNB estimates by 15%+.

Bernstein maintained a constructive view, setting a target price of Rs 900. It pointed to healthy top-line growth, new sales growth in Q4, and continued margin uplift in FY26 aided by product mix shift toward non-par products and favourable yield curve movements.

Citi set a target price of Rs 1,475 with a ‘Buy’ rating. It highlighted management efforts around persistency improvement, product innovation, productivity of existing agents, agent base augmentation, and higher business through non-agency channels. Citi also flagged visibility on promoter holding structure as an overhang, even as operational performance remains sound.

Why the quarter matters for LIC investors

The quarter combined higher profit, a sharp improvement in new business profitability, and capital strength indicators such as a higher solvency ratio. For investors tracking LIC versus private peers, VNB margin movement and product mix are central, and the 21.2% margin figure featured prominently in brokerage notes.

At the same time, management’s caution on volatility affecting group business adds a note of sensitivity to macro conditions. Reuters’ reference to weaker sentiment for market-linked products also underlines that product mix and customer risk appetite can influence growth within segments.

What to watch next

In the near term, the market will track the bonus and dividend record dates and the completion of the allotment process. Investors are also likely to watch whether the momentum in group business sustains, and whether the push toward non-participating products continues to support margins.

The next set of disclosures and management commentary will be key to understanding how LIC balances growth across group and individual segments, particularly in an environment where sentiment and volatility can shift quickly.