SBI Life Insurance Company Ltd is likely to report a mixed bag of Q4 financial results on April 26, with the key measure of premium income seen rising nearly 15 percent on-year, but value of new business is expected to moderate.
The state-run life insurer’s Annualised Premium Equivalent (APE) is expected to grow nearly 15 percent year-on-year to Rs 5,227 crore, according to the average of four brokerage estimates compiled by Moneycontrol.
Axis Securities said that SBI Life’s APE growth will remain healthy, aided by non-participating insurance plan (NPAR) and annuity products.
APE is defined as the sum of annualised first-year premiums on regular premium policies, and 10 percent of single premiums, written by the company during the fiscal year from both retail and group customers.
The Value of New Business (VNB) of SBI Life is estimated to decline marginally by 1.2 percent on year to Rs 1,423 crore. VNB is the present value of expected future earnings from new policies written during a specified period. It reflects the additional value to shareholders expected to be generated through the activity of writing new policies during a specified period.
VNB margin is expected to fall sharply to 26.1 percent in the January-March, as shown by the Moneycontrol poll. It was at 31.6 percent in the year-ago period.
Investors will watch the management’s commentary on VNB margin, changes in product mix, and growth guidance.
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UBS said that an economic slowdown, low uptake of insurance products by retail investors, regulatory and tax rate changes, equity market volatility, and sharp interest rate movements could pose risks to SBI Life’s growth.
Nirmal Bang, Kotak Securities, and UBS had a ‘Buy’ rating on the stock with a target price of Rs 1,775, Rs 1,675, and Rs 1,630, respectively. Nirmal Bang and UBS were of the view that valuations of SBI Life were conducive to its growth.
On April 25, shares of SBI Life closed over one percent lower at Rs 1,445. The stock has gained over 10 percent in the past six months.
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