Multiple brokerages reiterated their positive outlook on SBI Life Insurance Ltd., raising target prices while highlighting growth prospects, following the insurance player's earnings report for the October-December (Q3) period of the current fiscal year (FY25).
SBI Life Insurance reported its net profit for the quarter jumped 71 percent to Rs 550.82 crore, from Rs 321.75 crore in the corresponding quarter last year.
The life insurer's net premium income for Q3 FY 25 stood at Rs 24,828 crore, registering an 11 percent year-on-year growth compared to Rs 22,326 crore reported in Q3 FY 24. This was driven by a 14 percent surge in first-year premiums, which amounted to Rs 1,446.76 crore during the quarter. SBI Life's solvency ratio remained strong at 2.04, well above the regulatory requirement of 1.50.
At 9.20 am, shares of SBI Life were quoting Rs 1,506.7 on the NSE, down 2.2 percent compared to the previous session's closing price.
Follow our live blog to catch all the market updates
SBI Life maintained its VNB margin on sequential basis despite the share of ULIP rising in overall product mix. The firm's management partially attributed this to the repricing impact of non-PAR the previous quarter. Furthermore, protection rider on savings products along with better re-insurance terms on the credit life business aided margins during the quarter, noted Japanese brokerage Nomura Holdings.
Further, SBI Life's management guided that the total APE growth of 10-11 percent, individual APE growth of 14-15 percent, and expects VNB growth to remain at six percent on-year. Over the medium term, the company expects to deliver margins of 27-29 percent.
With banca channel growth rebounding, agency channel performance improving, clarity on changes in surrender regulations, and limited impact, if any, from possible removal of the Section 80C exemption in the upcoming Budget, the growth and profitability trajectory looks predictable, said Emkay Global.
Should you buy, sell, or hold SBI Life shares?
"SBI Life maintains its leadership position among private players with a market share of ~17 percent (3QFY25), and is well-entrenched for growth in FY25F, given cross-selling opportunities for SBI customers are significant, in our view, and its substantial investment in
the agency business," said Nomura. The brokerage maintained its buy rating, with a reduced target price of Rs 1,800 apiece.
Given favorable valuations and improved growth visibility, Emkay Global upgraded the stock to buy, hiking the price target to Rs 1,850 per share, from Rs 1,750 earlier.
HSBC maintained a 'buy' rating, increasing the target price to Rs 1,800 from Rs 1,720, citing improved APE growth and a strong valuation case for compounding. Goldman Sachs also maintained its 'buy' call, raising the target to Rs 1,800 from Rs 1,770, while noting SBI’s channel-driven growth and reaffirming 15 percent retail APE growth guidance for FY25.
On the flip side, Macquarie issued a 'neutral' call with a target of Rs 1,435, citing concerns over group APE decline.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
