Shares to buy: Experts bet on this stock, set to give 20% return

Driven by protection business margin indication of around 105 per cent, the market experts have expressed bull run in the SBI Life Insurance stocks in both short-term and mid-term perspectives. The experts have advised equity investors to take buy position into the stock for return to the tune of 20 per cent in three to four month time.

Commenting upon the future outlook of the SBI Life Insurance shares Madhukar Ladha, Analyst, HDFC Securities told Zee Business online in a written statement, "SBI Life’s 3QFY19 total NBP grew 34.6 per ccent YoY to Rs 39.2bn. Total APE at Rs 28.9bn grew 17.2 per cent YoY, an improvement from 14.2 per cent seen in 2QFY19. Protection business share on APE basis improved to 7.3 per ccent (198bps YoY) as the company’s focus on individual protection (through its parent SBI) resulted in a 10x YoY/+37.5 per cent QoQ growth in individual protection business to Rs 1.1bn. Opex ratio improved to 9.6 per cent (-135bps YoY). VNB margin expanded 40bps QoQ to 19.6 per cent (9MFY19). The company management stated that protection business contributes  around 33 per cent to overall VNB, indicating a protection business margin of 105 per cent."

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He said that in nine month of the current fiscal renewal premium growth was at 37 per cent reflecting sound underwriting. Individual APE grew at a sound 17.5 per cent YoY to Rs 27.2bn while group APE grew 7.2 per cent YoY to Rs 1.7bn. Group APE growth is optically muted as the 5yr regular pay credit protect policy has been changed to a single premium one.

On his suggestion for the equity market investors in regard to SBI Life Insurance share Madhukar Ladha of HDFC Securities told, "I recommend buy in SBI Life Insurance with a target price of Rs 750." Currently the strip is moving in the range of Rs 624 levels. A move up to the levels of Rs 750 would give invetors a return to the tune of Rs 125 or near 20 per cent on their investment.

Asked about the same, Simi Bhaumik, Technical Equity Analyst (officially registered with SEBI) said, "Technically the strip looks strong in both short-term and mid-term perspective. The SBI Life Insurance share has a strong support at below Rs 600 levels and is looking strong to show Rs 645-650 levels soon. Once it sustains above this levels it would be looking forward to the Rs 685 to Rs 710 levels subject to its results." Bhaumik said that if the SBI Life Insurance results come on the expected lines of the markets, the strip can see a bull run in next three-four months. 

"I advise investors to take a buy position in SBI Life Insurance share maintaining a stop loss below Rs 600 levels," concluded Bhaumik.