SBI Life, Max Life, Can Fin Homes, HDFC and Cholamandalam are top picks in BFSI sector: Nirmal Bang’s Rahul Arora

Rahul Arora, CEO of Nirmal Bang Institutional Equities, on Tuesday said that SBI Life, HDFC Life and Max Life were his preferred picks within the insurance space.

“We will still be going with the non-lenders. We prefer names like SBI Life and HDFC Life Insurance in the largecaps and Max Life Insurance in the midcaps. If you look at the three of them, the return on embedded value and RoEs are close to about 18-20 percent and they are all gaining market share. However, there is a huge valuation differential between HDFC Life and the rest of the pack. So, to that extent, I am tilted more towards the SBI Life and Max Life,” he said in an interview to CNBC-TV18.

Within the housing finance space, Arora is positive on HDFC Limited and Can Fin Homes. “We are also fairly positive on the housing finance companies. We would look at HDFC Limited in the largecap space and something like Can Fin Homes. Can Fin Homes is doing very well, but the kind of stress that was anticipated post COVID, I think they have delivered spectacular asset quality. It is not the cheapest mid to smallcap NBFC – I think it is trading close to 3 times one year forward price to book, but then nothing is cheap in this market that is quality,” he said.