Shares of SBI Life Insurance Company Ltd surged in early morning deals on Friday, boosted by positive brokerage views and a higher target on stock price a day after the insurance firm posted strong results.
SBI Life's net profit for the April-June quarter jumped 18 percent to Rs 262.5 crore percent year-on-year (YoY), aided by growth in premium income. It had posted Rs 223.16 crore as net profit in the same quarter a year ago.
SBI Life's new business premiums surged 67 percent YoY to Rs 5,590 crore in the period against Rs 3,350 crore a year ago in the June quarter. The renewal premiums were up 14 percent.
SBI Life's value of new business (VoNB—a measure of the profitability of the new business written in a period)—increased by 130 percent to Rs 880 crore from Rs 380 crore in the year-ago period. The VoNB margin increased by 665 basis points to 30.4 percent against 23.7 percent.
SBI Life's annualised premium equivalent (APE) is up 80 percent to Rs 2,900 crore in the June quarter against Rs 1,620 crore in the same period a year ago.
Owing to the strong performance, Morgan Stanley has set a target price of Rs 1,500 per share with an 'overweight' stance on attractive valuations and strong fundamentals, while adding that SBI Life remains its top pick among non-bank financials.
Goldman Sachs has a 'buy' rating with a target price of Rs 1,400. SBI Life expects at least 25 percent growth in FY23 with scope for calibrated margin expansion on the back of improving product mix.
Citi has raised the target price to Rs 1,665 per share with a 'buy' rating noting that the company is in a sweet spot to deliver over 18 percent medium-term operating return on embedded value. Citi also added that SBI Life can drive margin expansion higher than peers as SBI is a key backbone to its strong performance.
SBI Life share price was quoting at Rs 1,295 apiece on BSE, up 8.7 percent at 11.03 am.
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First Published: Jul 29, 2022 11:37 AM IST
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