SBI Life share price hits new all-time high; brokerages recommend Buy - check price target

SBI Life share price: Shares of SBI Life Insurance touched a new all-time high of Rs 1,304.45 per share after surging by over 9.5 per cent on the BSE intraday during Friday’s trading session, after the strong June quarter earnings in the financial year 2022-23 (Q1FY23). The stock is also a top Nifty50 index gainer. 

SBI Life on Thursday posted good results pertaining to business growth during Q1FY23 as gross written premium (GWP) grew by 35 per cent year-on-year (YoY) to Rs 11350 crore.  

New business premium was the key driver of overall growth, up by 67 per cent YoY to Rs 5590 crore while renewal premium increased by 14 per cent YoY to Rs 5760 crore. Similarly, the VNB margin has improved by 665 basis points YoY to 30.4 per cent, mainly on strong new business growth. 

Axis Capital expects the insurance company to deliver growth across segments and increase FY23E/ FY24E VNB by 6 per cent each factoring in favourable product mix and higher share of NPAR and Protection) and strong Q1FY23.  

The brokerage retained a Buy stance with an unchanged target price of Rs 1,500 per share, implying a 26 per cent upside. It added, “Extensive distribution franchise, robust persistency trends and adequate solvency ratio of 221 per cent provide a competitive advantage.” 

Kotak Institutional Equities expects SBI Life to deliver 25 per cent APE (Annual Premium Equivalent) growth in FY23E with 18 per cent residual growth over the next nine months.  

The brokerage models VNB margins of 26.9 per cent over the next nine months, translating to 27.4 per cent for FY2023E which will gradually increase to 29.2 per cent in FY2025E. It expects the business mix to revert partially in favor of ULIPs or par business over the next few months. 

As the overall performance is superlative, Kotak Institutional Equities believe that channel diversification will facilitate stock rerating. It also retained a Buy stance with a revised target price of Rs 1,600 from Rs 1,500 per share, implying over 34 per cent upside. 

According to YES Securities, VNB margin expansion was driven by a change in product mix, mainly a rise in the share of Non-Par Guaranteed business. Apart from strength in Non-Par Savings, Par business made a relative comeback, when viewed from a YoY lens. 

The brokerage maintained a Buy rating on SBI Life with a revised price target of Rs 1675 per share, implying an upside of around 41 per cent on the share price.