Brokerages bullish on SBI Life post Q4 results

NEW DELHI: Stock brokerages retained their bullish view on SBI Life Insurance after the company on Tuesday posted a nearly 16 per cent rise in its net profit at Rs 530.67 crore for the quarter to March 2020.

JM Financial and Edelweiss Securities maintained ‘Buy’ with a target price of Rs 860.

The company’s net premium income during the March quarter of FY20 increased to Rs 11,862.98 crore from Rs 11,333.02 crore a year earlier. However, its total income slipped to Rs 5,674.91 crore from Rs 15,600.97 crore in the same quarter last year, mainly because of loss in investment income.

“SBI Life Insurance continued to gain market share in FY20 vis-à-vis its top private competitors. Focus on improving productivity of bancassurance is paying off as bancassurance productivity jumped 17 per cent YoY. This is expected to go up further given management’s increasing attention to utilise the extensive branch network of SBI across pin codes,” Edelweiss said.

The insurer witnessed a loss of Rs 6,677.19 crore in its investment income during January-March, as against a gain of Rs 4,150.73 crore in the same quarter of the previous fiscal.

SBI Life said its new business premium (NBP) has shown steady growth of 20 per cent on the year to Rs 16,590 crore during the fiscal ended March 2020.

“SBI Life is better placed to weather the Covid-19 disruption given significant brand equity, an expansive multi-channel, pan India distribution network, cost leadership and access to parent’s huge client base. We expect an 18 per cent EV CAGR over FY20-22E with 17-18 per cent operating RoEVs with key risks being growth, persistency and unfavourable yield movement,” JM Financial said.

The shares of the company closed 2.56 per cent higher at Rs 734 on BSE.