SBI Life Insurance Company shares crossed Rs 800 level for the first time on July 24, rising 4 percent intraday after reporting strong growth in June quarter.
The stock has given 39 percent return in the last nine months. At 0952 hours IST, it was quoting at Rs 803.50, up Rs 27.40, or 3.53 percent on the BSE.
The private life insurer posted a 5 percent year-on-year growth in its June quarter net profit at Rs 372 crore, backed by a 52 percent YoY growth in new business premium in Q1.
The company's protection (pure term insurance) new business premium collection grew a whopping 106 percent YoY and the share of protection business grew to 14 percent in Q1FY20 from 10 percent in Q1FY19.
The individual new business premium (retail business) collection also increased 41 percent YoY to Rs 1,872 crore in Q1FY20.
While having overweight call with a target price at Rs 850 per share, global brokerage Morgan Stanley said strong growth with higher margins drove SBI Life's value of new business (VNB) growth.
"VNB growth of 50 percent was 5 percent above our estimate, helped by strong premium growth. Most key operating metrics showed positive improvement," it added.
Citi also has a buy call on the stock and raised price target to Rs 1,000 from Rs 850 as annualised premium equivalent (APE) growth was at 41 percent YoY and VNB margin was healthy.
"Operational trends remained strong. SBI Life has enough headroom to grow its protection business. Company's continued focus on protection should drive VNB margins higher," the brokerage said, adding it factored in higher APE growth of 27 percent in FY20 versus 18 percent earlier.
The value of new business (VNB) increased 49 percent YoY to Rs 371 crore in the first quarter. The VNB margin has increased from 19 percent in Q1FY19 to 19.9 percent in Q1FY29.
In Q1, SBI Life reported a decrease in operating expense ratio from 9.7 percent in Q1FY19 to 7.4 percent to Q1FY20. The 13th month persistency improved by 200 basis points YoY to 84.46 percent in Q1.
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