Expert pegs SBI Life share price target at Rs 975, stop-loss at Rs 874

Ashis Biswas, Head of Technical Research at CapitalVia Global Research says that SBI Life has broken its resistance around Rs 900 recently. The stock has picked up momentum since then, indicating that the stock is likely to continue its upmove further. Ashis put a buy rating on SBI Life with the target of Rs 975. He added, "Investors are advised to maintain a stop-loss of Rs 874." 
 
Motilal Oswal highlighted that the shift in product mix toward higher-margin Protection and Annuity business would continue to drive improvement in VNB margins. In individual Protection, 85% of policies are ROP and the rest are pure Term policies. Pricing in the Protection segment remains stable and has not been tweaked as compared to other players. On the operating cost front, cost optimization will continue, while some expenses will rise due to continued investment in technology and higher discretionary expenses. However, SBI Life would continue to maintain its cost leadership.
 

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Motilal Oswal says that the recent taxation announcement in the Budget 2021-22 with regard to ULIPs will not have a material impact on SBI Life due to:

a)      lower ticket size
b)      strong diversified savings suite

Motilal Oswal says that currently, 61% of banca branches are active, which generates a premium of Rs 50k/month, while the rest generate lower premium. SBI Life continues to see improving trends from non-metro locations and expects Insurance penetration to improve in Tier II/III cities.

In FY21, SBI Life formed new banca partnerships with Yes Bank, UCO Bank, and Suryoday Small Finance Bank. It has partnered with Regional Rural Banks as well. Individual security is also becoming a primary priority field for YONO, with 0.77 million lives protected in the last year and a cover of up to INR 4 million. Currently, 61% of banca branches are operational, generating a monthly premium of INR 50k, while the remaining branches produce a lower premium. As of 9MFY21, persistency was at 86.2% (50 basis points YoY) for the 13th month, said Ashis.
 
Ashis highlights that in addition, the 61st month persistency rate is the best in the sector due to:
 
a)     lower ticket size
b)    a good diversified savings suite, the latest taxation announcement in the Budget 2021-22 with regard to ULIPs would have no material effect on SBILIFE.