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ULIPs and Non-Par Products Continue to Drive Grow: For Q2FY26, LIC reported total premium income of Rs. 1,26,940 crore, up 5.5% YoY. Individual new business premium grew 2.8% to Rs. 11,750 crore, while individual renewal premium rose 6.1% to Rs. 61,000 crore. The Annualized Premium Equivalent (APE) slightly declined 0.5% YoY to Rs. 14,086 crore, with non-par APE increasing 30.5% YoY to comprise 44.3% of individual APE. ULIP sales surged 113.1% YoY, raising their individual APE share to 10.3% from 5.3% a year ago. Management remains optimistic about the sustained momentum in ULIP and non-par product growth, highlighting positive demand trends and channel diversification. They expect the GST exemption impact to drive further industry penetration and growth in coming quarters, focusing on volume growth, ticket size increases, and persistency improvements to maintain strong premium income expansion.

VNB and margin beats expectations: For Q2FY26, LIC’s Net Value of New Business (VNB) rose to Rs. 3,170 crore, up 19.8% YoY from Rs. 2,647 crore in Q2FY25, reflecting effective execution in high-margin product segments. The overall net VNB margin expanded by 190 basis points YoY to 19.3% from 17.4% last year, driven primarily by an enhanced business mix with a strong scale-up of non-participating products and increased contributions from ULIPs. The individual business VNB margin improved further to around 24–25% from 23-24% in Q1FY26, supported by high-ticket non-par savings and annuity products. Management highlighted that favorable product mix and improved operating assumptions added positively to margins, partially offset by adverse economic assumptions, including a declining risk-free rate. The strategic focus remains on balancing margin enhancement with APE growth, while actively managing interest rate and persistency risks through dynamic hedging of the expanding non-par portfolio. Management remains confident in sustaining growth momentum in these segments.

LIC continues to expand and diversify its distribution channels: In Q2FY26, LIC’s agency channel share in individual new business premium moderated slightly to 92.13%, while bancassurance and alternate channels strengthened, with new business premium via bancassurance up 48.2% YoY to Rs. 1,265.88 crore and alternate channels surging 114.6% YoY to Rs. 758.22 crore, together lifting these channels’ share to 7.12%. The agency force totaled approximately 14.85 lakh, supported by millennial recruitment, ongoing training, and initiatives like Bima Sakhi Yojana, which has empowered 2.57 lakh women agents selling over 8.5 lakh policies in H1FY26. Digital adoption continued to gain traction, with the ANANDA app processing 8.78 lakh policies (+21.5% YoY). Management remains focused on channel diversification, agent productivity, and leveraging digital tools to sustain business momentum through multiple distribution avenues.

Valuation & Outlook: LIC’s valuations remain attractive with the stock trading at a reasonable price-to-embedded value multiple of around 0.9x for FY27E. The company continues to deliver steady premium growth and sustained improvement in product mix, especially through expanding non-par and ULIP segments. Distribution diversification with strong bancassurance and alternate channel traction supports this growth. Operational efficiencies and disciplined cost management further strengthen the outlook. Given LIC’s solid fundamentals, market leadership, and positive regulatory tailwinds such as the GST exemption boosting long-term penetration, the risk-reward remains favorable. Hence we maintain BUY with an updated target price of Rs. 1,150.

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