LIC rival SBI Life reports muted annual premium growth in Q4; brokerages see over 30% upside to stock

SBI Life Insurance share price fell nearly 4.5 per cent to Rs 1066.60 apiece in intraday trade on Friday.

SBI Life Insurance
SBI Life Insurance share price fell nearly 4.5 per cent to Rs 1066.60 apiece in intraday trade on Friday. (File: Reuters)

SBI Life Insurance share price fell nearly 4.5 per cent to Rs 1066.60 apiece in intraday trade on Friday. The insurer reported a 26 per cent jump in profit to Rs 672.15 crore in the fourth quarter of FY 2022, while the annual premium equivalent (APE) growth moderated. The life insurance company reported 4 per cent growth in APE in Q4, down from 30 per cent in the third quarter and 36 per cent in the first nine months of FY 2022.. Brokerages, however, remain  bullish on the stock and see over 30 per cent upside, betting that the company’s “higher-than-market growth” will likely continue. Brokerage firm Emkay has raised its target price for the stock to Rs 1645 apiece, which is a 47 per cent upside from Thursday’s close.

Should you buy, hold or sell SBI Life shares?

Motilal Oswal: Buy Rating; 30 per cent upside

Target Price : Rs 1450

“APE growth was muted in 4QFY22 due to pressure in ULIP (unit linked insurance policy)and par products. ULIP posted a 6 per cent decline YoY after four quarters of strong double-digit growth. The decline was led by heightened volatility in capital markets due to geopolitical crisis and increase in interest rates,” thr brokerage said. It has cut growth projections marginally as it expects SBI Life to deliver22 per cent CAGR in APE over FY 2022-2024. The brokerage said the stock remains its preferred pick in the Life Insurance space, adding that it maintains a BUY rating with a target price of Rs 1,450 apiece,” the brokerage said.

Emkay: Buy Rating; 47 per cent upside

Target Price Rs 1645

“With all its distribution channels firing, expanding product offerings and widening acceptance, we expect robust growth to continue in FY23 and beyond. The formidable combination of brand and distribution reach in terms of geography and demography makes SBILIFE a formidable force in the Indian life insurance sector. Based on the risk-reward proposition, SBI LIFE remains our top pick in the sector. We reiterate our Buy rating with a revised target price of Rs1,645,” Emkay said .

Kotak Institutional Equities: Buy Rating; 36 per cent upside

Fair Value Rs 1525

SBI Life reported flat VNB (value of new business) on the back of 4 per cent yoy APE growth in 4QFY22 and surprising margin decline on a solid base and product reprising.Full year growth remains healthy (VNB up 39 per cent and APE up 25 per cent) with further market share gains. We expect higher-than-market growth to continue, retain BUY, FV (fair value) at Rs 1,525. “We expect SBI Life to deliver 21 per cent VNB CAGR followed by 18 per cent APE CAGR during FY2022-25E following continued support of SBI and steady shift to non-par, annuities and protection, which is currently lower than that of peers,” it added.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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