Ajcon Global has come out with its report on SBI Life Insurance Company , The research firm has recommended to “ Subscribe ” the IPO in its research report as on September 19, 2017
SBI Life Insurance Company Limited was incorporated at Mumbai on
October 11, 2000. The company is registered with IRDAI for carrying out
the business of Life Insurance pursuant to the registration certificate
dated March 29, 2001. SBI Life was established as a joint venture
between the State Bank and BNP Paribas Cardif S.A (“BNPPC”) in 2001.
As of March 31, 2017, State Bank was India’s largest commercial bank in
terms of deposits, advances and number of branches. BNPPC, an
insurance subsidiary of BNP Paribas, with operations across 36
jurisdictions internationally, is among the leading credit life insurance
businesses globally.Objects of the issue
The IPO includes an initial public offer of upto 120 mn. Equity shares
of face value of Rs. 10 each through an offer for sale by State Bank
of India and BNP Paribas Cardif where each will be selling up to 80
mn. Equity shares and up to 40 mn equity shares respectively.
Promoter SBI will reduce its holding by 8 percent to 62.1 percent
and BNPPC will reduce 4 percent stake to 22 percent.Investment Rationale and Recommendation
We like the story of SBI Life is uniquely positioned as it is doing well in
both the major channels: - agency distribution or individual agency
where it is growing at around 20 percent which is double of the general
industry growth in this channel and in bancassurance the potential that is
available in State Bank Group is immense.
largest private life insurer, c)cost ratios, mis-selling ratio of SBI
Life are relatively lower than other players, d) consistent track
record of rapid growth, d) significant brand equity and pre
eminent promoters, e) diversified product portfolio,
f) expansive multi – channel distribution with pan – India
bancassurance channel and high agent productivity, consistently
maintained its Solvency Ratio at over 2 in each of the last 5 fiscal
years, and at 2.11 as of June 30, 2017, compared to the IRDAI
mandated minimum Solvency Ratio of at least 1.50, g) highest
embedded value in Life Insurance Industry, we recommend
“SUBSCRIBE” to the issue for investors for a long term horizon of
5-10 years as the real fruits of the story would grow multifoldover that period.
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