LIC Reports 31% Rise in Q2 Net Profit: Key Takeaways

Life Insurance Corporation of India (LIC) has reported strong financial results for the quarter that ended on September 30 2025 (Q2 FY26). The company posted a consolidated net profit of ₹10,098 crore, up 31 % year-on-year (from ₹7,728 crore in Q2 FY25). Net premium income rose 5.5 % to ₹1,26,930 crore, compared with ₹1,20,326 crore a year ago.

Investors now face a question: Does the marked improvement signal a sustained turnaround for LIC, or is much of it front-loaded and subject to longer-term pressures?

What’s Driving the Momentum?

Here are the key growth and margin drivers that the company has highlighted:

• Assets under management (AUM) increased 3.31 % year-on-year to ₹57.23 lakh crore (₹57,22,896 crore) as of 30 September 2025.
• The value of new business (VNB) for the first half of FY26 (H1) rose to ₹5,111 crore, up 12.3 % year-on-year.
• VNB margin (net) improved to 17.6% in H1 FY26 from 16.2% a year earlier.
• The expense ratio for H1 FY26 came down to 11.28%, falling 146 basis points from 12.3% in H1 FY26.
• Premium mix: Total premiums went up from ₹1,44,696 crore in the first half of the year to ₹1,50,715 crore at the same time of the year. Non-Par Annualized Premium Equivalent (Non-Par APE) share of individual business rose to 36.31% from 26.31%.

Why This Result Matters, And What to Watch

• The 31 % jump in net profit outpaces the modest 5.5 % premium growth. This implies that margin improvements, cost control, mix shift, and better yields have played a significant role.
  
• AUM growth of just 3.3 % suggests that scale expansion is slow; hence, much of the near-term improvement is coming from efficiency and product mix rather than large incremental flows.
  
• Renewal business and non-par products (which typically carry higher margins) are gaining share. That works well for recurring profitability.
  
• However, several issues remain:
  

○ On a sequential basis, the PAT fell 7.8 % from Q1 FY26’s ₹10,957 crore.
○ First-year premium in Q2FY26 was ₹10,836 crore, down from ₹11,201 crore in Q2FY25, indicating new business growth is still under pressure.
○ Given the large legacy book and regulatory risks (interest rates, product design, mortality experience), sustaining margin improvements may be challenging.

Outlook And Investor Implications

LIC’s management expressed optimism around the second half of FY26, citing healthy demand trends, product innovations, and channel diversification. From an investor’s perspective, the strong headline growth is encouraging, but two themes will determine whether this becomes a durable investment case:

1. Sustainability of premium growth and mix: If LIC can continue expanding its individual new business premium, particularly via non-par products and alternate channels, that would indicate a structural improvement in the quality and sustainability of growth.

2. Enhancement of core metrics (VNB, margins, expense ratio): The improvement in VNB and margins is positive; if LIC can maintain or improve them while scaling, earnings should strengthen further.

A conservative investor might treat the current results as a reset point. LIC has demonstrated it can improve performance, but the question now is how much and for how long. Will the insurer replicate this performance over the next few quarters, or will growth plateau as headwinds reassert (e.g., competition, regulatory change, persistence risks)?

Conclusion

LIC’s Q2 result, net profit of ₹10,098 crore (up 31 %) and premium growth of 5.5 %, marks a positive step forward. But for investors looking for a long-term bet, the next few quarters will need to demonstrate sustained growth in new business, improved mix and rising margins. The headline number is strong; the value lies in the underlying drivers and whether they hold. Should you treat this as a buying opportunity, or wait for further confirmation?

References

The Economic Times
Business Standard
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The Economic Times
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