HEM Securities 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
Co was established as a joint venture between the State Bank and BNPPC in 2001. As of March 31, 2017, State Bank was India’s largest commercial bank in terms of deposits, advances and num-ber of branches (Source: RBI data). BNPPC, an insurance subsidi-ary of BNP Paribas, with operations across 36 jurisdictions interna-tionally, is among the leading credit life insurance businesses glob-ally. As of July 31, 2017, co had a comprehensive product portfolio of 37 individual and group products (of which eight products are group products), including a range of protection and savings prod-ucts to address the insurance needs of diverse customer segments. Co have developed a multi-channel distribution network compris-ing an expansive bancassurance channel, including State Bank, the largest bancassurance partner in India, a large and productive indi-vidual agent network comprising 95,177 agents as of July 31, 2017, as well as other distribution channels including direct sales and sales through corporate agents, brokers, insurance marketing firms and other intermediaries
Reasons to "Subscribe"
Co is India’s largest private life insurer, in terms of New Business Premium generated in each fiscal year, since Fiscal 2010 (Source: CRISIL Report). Co have also increased its market share of New Business Premium generated among private life insurers in India, from 15.87% in Fiscal 2015 to 20.04% in Fiscal 2017 (Source: CRISIL Report). Between Fiscal 2015 and Fiscal 2017, co’s New Business Premium generated increased at a CAGR of 35.45%, which is the highest among the top five private life insurers (in terms of total premium in Fiscal 2017) in India (Source: CRISIL Report). Co have also issued the highest number of individual life policies annually among the top five private life insurers (in terms of total premium in Fiscal 2017) in India since Fiscal 2014 (Source: CRISIL Report). In Fiscal 2017, co had 13th month and 61st month Persistency Ratios of 81.07% and 67.18%, respective-ly, with its 61st month Persistency Ratio being the highest among the top five private life insurers (in terms of total premium in Fiscal 2017) in India (Source: CRISIL Report). Fiscal 2015 and Fiscal 2017, while co’s Individual Rated Premium increased at a CAGR of 37.90% in the same period. Co’s (“AUM”) increased from Rs 713,389.30 million as of March 31, 2015 to Rs 977,366.03 million as of March 31, 2017, and was ₹ 1,012,260.34 million as of June 30, 2017.
Company is bringing the issue at p/e multiple of 55-56 on post issue Q1FY18 annualized eps of Rs 12.54. At upper band, co is trading at P/EV multiple of 4.23x which is slightly higher .Although co has enjoyed superior growth but looking after valuation, we recommend "Subscribe” on issue for long term.
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