MUMBAI: LIC posted an 18% fall in standalone net profit at Rs 2,371.55 crore for the March 2022 (Q4FY22) quarter, the first quarterly result post its mammoth listing. The board of LIC declared a dividend of Rs 1.50 per equity share with a face value of Rs 10 each, subject to shareholder approval. The government, which holds 96.5% in LIC, will pocket 915 crores in dividends.
Analysts said the payout was lower than Rs 15-20 per share that some market quarters had anticipated, which could have a near-term negative impact on the stock as the results were announced post-market hours on Monday.
“The fall in net profit and lower dividend payout could possibly have a knee-jerk impact,” said Rajesh Palviya, technical head at Axis Securities. The stock closed up almost 2% at Rs 837.75 apiece on Monday. Net premium income stood at Rs 1.44 lakh crore in Q4, up 18% from a year ago. The solvency ratio, the ability of the insurer to meet long-term debt obligations, stood at 1.85 against 1.76 in Q4FY21.
The government diluted 3.5% stake raising Rs 20,557.23 crore. The share of LIC closed at Rs 837.75, up 2% from its previous closing. The results were declared after market closing hours. Net income from investments was flat at Rs 67,498 crore. The yield on investments (without unrealised gains) was at 7.46% against 8.02% in the year-ago quarter.
LIC is one of the largest investors in the Indian equity markets, known to buy at low levels and along with domestic institutions acting as support against FII sales. Analysts expect investment income to improve, going forward, which was badly hit by the Ukraine war. This could improve profitability.
“Going forward, with improved price realisations of stocks, the investments side could show an improvement, which could have a positive impact on profit,” said Sunil Pachisia, director, institutional sales, Pratibhuti Vinihit. LIC’s 13-month persistency ratio, a gauge of policy renewals, fell to 69.24% in Q4 from 73.94% a year ago. However, the 25th-month persistency ratio rose to 68.23% from 62.73%. The net premium from the non-participating Life segment rose to `18,089 crore from Rs 14,212.17 crore.
On a consolidated basis, including seven subsidiaries and six associate companies like LIC Housing Finance and IDBI Bank, net profit fell 17.4% at Rs 2,409 crore. The LIC IPO was subscribed 2.93 times , with the policyholder portion being subscribed 6 times and the retail portion being subscribed 1.97 times.