Earnings impact: SBI Life hits record high, crosses Rs 800 mark

Citi has a buy call on the stock and raised price target to Rs 1,000 from Rs 850 as annualized premium equivalent (APE) growth was at 41 percent YoY and VNB margin was healthy

SBI Life Insurance Company shares crossed Rs 800 level for the first time on July 24, rising 4 percent intraday after reporting strong growth in June quarter.


The stock has given a 39 percent return in the last nine months. At 0952 hours IST, it was quoting at Rs 803.50, up to Rs 27.40, or 3.53 percent on the BSE.

The private life insurer posted a 5 percent year-on-year growth in its June quarter net profit at Rs 372 crore, backed by a 52 percent YoY growth in new business premium in Q1.

The company's protection (pure term insurance) new business premium collection grew a whopping 106 percent YoY and the share of protection business grew to 14 percent in Q1FY20 from 10 percent in Q1FY19.

The individual new business premium (retail business) collection also increased 41 percent YoY to Rs 1,872 crore in Q1FY20.

While having an overweight call with a target price at Rs 850 per share, global brokerage Morgan Stanley said strong growth with higher margins drove SBI Life's value of new business (VNB) growth.

"VNB growth of 50 percent was 5 percent above our estimate, helped by strong premium growth. Most key operating metrics showed positive improvement," it added.

Citi also has a buy call on the stock and raised price target to Rs 1,000 from Rs 850 as annualized premium equivalent (APE) growth was at 41 percent YoY and VNB margin was healthy.

"Operational trends remained strong. SBI Life has enough headroom to grow its protection business. Company's continued focus on protection should drive VNB margins higher," the brokerage said, adding it factored in higher APE growth of 27 percent in FY20 versus 18 percent earlier.

The value of the new business (VNB) increased 49 percent YoY to Rs 371 crore in the first quarter. The VNB margin has increased from 19 percent in Q1FY19 to 19.9 percent in Q1FY29.

In Q1, SBI Life reported a decrease in operating expense ratio from 9.7 percent in Q1FY19 to 7.4 percent to Q1FY20. The 13th-month persistency improved by 200 basis points YoY to 84.46 percent in Q1.

Disclaimer: The views and investment tips expressed by brokerages on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

For taking 2 days free trial and Stock Market Tips with more than 90% accuracy click here MCX Tips

Comments

Post a Comment

Popular posts from this blog

Technical Classroom: How to use Fibonacci Retracement Levels in stock trading

Image
Fibonacci retracement is a method of technical analysis for determining support and resistance levels A Fibonacci retracement is a popular tool among technical traders and is based on some key numbers. The origins of the Fibonacci series can be traced back to the ancient Indian mathematic scripts, with some claims dating back to 200 BC. However – in the 12th century - Leonardo Pisano Bigollo, an Italian mathematician who was known to his friends as Fibonacci, discovered Fibonacci numbers. It is a popular tool that technical traders use to help identify price levels for transactions, stop losses or target prices. These retracement levels also provide support and resistance levels for a stock. However, it really becomes most effective when confirming signals or conditions identified by additional technical analysis tools. Fibonacci Retracement is a method of technical analysis for determining support and resistance levels. It is named after the use of the Fibonacci sequ...
Read more

Veto Switchgears jumps 5% on realisation of unsecured loan

Image
Veto Switchgears had given unsecured loan to its wholly owned overseas subsidiary Veto Overseas Private F.Z.E. Veto Switchgears and Cables shares rallied 4.8 percent intraday on June 14 after realization of unsecured loan from a subsidiary. "We realized an amount of $1 million against an unsecured loan on June 13," the wires & cables and electrical accessories manufacturer said in its filing. Veto Switchgears had given unsecured loan to its wholly owned overseas subsidiary Veto Overseas Private F.Z.E. The stock climbed 10 percent in the last 15 sessions. At 13:13 hours IST, it was quoting at Rs 66.75, up to Rs 1.10, or 1.68 percent on the BSE. G et a 2 days free trial in Stock Market Tips and MCX Tips  
Read more

Top buy and sell ideas by Ashwani Gujral, Sudarshan Sukhani, Mitessh Thakkar for short term

Image
Sudarshan Sukhani of s2analytics.com recommends buying Dabur India with stop-loss at Rs 381 and target of Rs 394, Ajanta Pharma with stop-loss at Rs 944 and target of Rs 973 and Hexaware Tech with stop-loss at Rs 410 and target of Rs 424. The market reversed most of its gains that were seen in the previous session and closed sharply lower on June 21. Escalated geopolitical tensions between the US and Iran and the RBI's concern over slowing economy dented traders' sentiment. Sensex fell 407.14 points or 1.03 percent to 39,194.49, while Nifty shed 107.70 points or 0.91 percent to 11,724.10, forming a bearish candle on the daily as well as weekly charts. For the week, indices declined 0.65 percent and 0.8 percent, respectively. The broader markets outperformed benchmark indices, with the Nifty Midcap and Smallcap indices closing flat with a negative bias. All sectoral indices closed in the red. According to the Pivot charts, the key support level is placed at...
Read more