Debt-free SBI group stock hits new high, Brokerages are bullish post Q1 results
2 min read 29 Jul 2022, 08:25 PM ISTSBI Life Insurance Company Ltd. shares today opened at Rs. 1262.65, reached a record high of Rs. 1,304.70 on the NSE, and closed at Rs. 1,294.00 per share, a rise of 8.61 per cent from the previous close of Rs. 1,191.45.
PremiumSBI Life Insurance Company Ltd. shares today opened at Rs. 1262.65, reached a record high of Rs. 1,304.70 on the NSE, and closed at Rs. 1,294.00 per share, a rise of 8.61 per cent from the previous close of Rs. 1,191.45. The stock had touched a 52-week low of ₹1,003.50 on 8th March 2022, meaning that after reaching a new high, it is currently trading 28.95 per cent higher than the low. The brokerage houses HDFC Securities and Motilal Oswal are bullish on the stock following the company's impressive Q1FY23 earnings. According to Value Research's research, SBI Life Insurance Company Ltd. is a debt-free company, and brokerage houses predict that the stock will reach a new high soon.
HDFC Securities has said in a note that “SBILIFE reported an all-time high adj. VNB margin at 30.4% (+670bps) on the back of a multifold increase in NPAR savings mix to 29% (+22pps), driving adj. VNB higher 1.3x YoY to INR8.8bn (+62% vs. estimates). Total APE grew 31% ahead of estimates (3y CAGR at 15%), driven by better than industry growth trends in retail protection, at 63% YoY. The company's three growth levers stay in place: (1) SBI’s massive distribution network (24k+ branches); (2) healthy mix of protection and NPAR; and (3) lowest opex ratio among peers (FY22: 8.8%). We raise VNB estimates by 12/11% to factor in the beat on APE and VNB margins. We expect SBILIFE to deliver a healthy FY22-24E APE/VNB CAGR of 18/25% and retain BUY with an increased TP of INR1,660 (albeit lower multiple at 2.8x Mar-24E as we roll forward our earnings)."
The brokerage has claimed that “Management remains confident on growth outlook of NPAR savings for FY23E and has guided for ~25-30% share of NPAR savings in the mix. We expect the share of NPAR savings in the mix to moderate during the rest of FY23E and expect repricing in an increasing interest rate environment to result in moderation in VNB margins."
Whereas Motilal Oswal has said in a note that “SBILIFE displayed a strong show in 1QFY23 with 80% YoY growth in APE along with a sharp jump of 132% YoY in VNB. VNB margin spiked ~665bp YoY fueled by a shift in underlying product mix in favor of high-margin products such as Non-PAR and Protection. Despite volatility in capital markets, ULIPs grew 33% YoY. All distribution channels contributed to the growth along with a rise in productivity of banca and agency channels. This led to a better cost ratio and SBILIFE continues to maintain cost leadership. Persistency improved across all key cohorts."
“We estimate 27% CAGR in APE over FY22-24. We further estimate VNB margin to remain steady from hereon to reach ~30% in FY24, thus enabling 36% VNB CAGR, while RoEV sustains at ~22%. We retain our BUY rating with a revised TP of INR1,500 (based on 2.6x FY24E EV)," said the research analysts of Motilal Oswal.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
