ICICI Direct is bullish on SBI Life Insurance has recommended buy rating on the stock with a target price of Rs 1000 in its research report dated July 22, 2020.
ICICI Direct's research report on SBI Life Insurance
Pace of premium accretion witnessed a revival sequentially though YoY it remained moderate. Recovery in equities and increase in yields led to robust investment gains partially offset by change in actuarial liability, led to higher than expected surplus and earnings. Premium growth witnessed a revival at ~14% YoY to Rs 7588 crore, led by higher traction in renewal and single premium. Accretion in new business premium came a tad lower YoY at Rs 3059 crore but was still better given the current scenario. Growth in renewal premium continued to remain healthy at ~30% YoY to Rs 4584 crore, conservation ratio at 88%. Within NBP, traction in individual business remained moderate at Rs 1260 crore in Q1FY21 vs. Rs 1760 crore in Q1FY20, primarily led by a decline in unit linked products. Traction in protection business tapered at Rs 290 crore vs. Rs 440 crore in Q1FY20, with proportion of NBP mix declining to 10% vs. 12.5% in FY20.
Hence, we maintain BUY on the stock with a revised target price of Rs 1000/share (earlier Rs 850) valuing the stock at 2.9x FY22E EV (~Rs 34500 crore in FY22E).
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