Yes Securities see an upside of 29% in this life insurance stock

Life and health insurance have drawn a lot of attention in the last few months due to the outbreak of covid19. Demand for life insurance products has risen since the beginning of the pandemic. SBI Life, India's largest private sector life insurer saw 58% jump in individual protection business and 95% yoy surge in group business. SBI Life Insurance Co Ltd (SBI Life) on Monday reported over two-fold jump in net profit at ₹300 crore for the second quarter ended 30 September, 2020. The life insurer had posted a net profit of ₹130 crore in the same quarter a year ago. Yes Securities remain positive on SBI Life with consistent performance on the protection business and revival in the ULIP business.

The broker recommends a Buy rating for SBI Life Insurance stock with a 1-year price target of Rs1,006, an upside of 29%. Currently, the stock is trading at ₹780 on NSE.

"SBI Life Insurance continues to focus on extracting more from its bancassurance and agency channels. Limited presence on the online platforms, however, is a dampener. The stock trades at FY22E P/EV of 2.1x, which we find attractive. We maintain our estimates and recommend BUY," says Prayesh Jain, lead analyst, Yes Securities.

The life insurer's income rose 45% to ₹18,458 crore during July-September period of 2020-21 from ₹12,745 crore in the corresponding quarter of 2019-20, SBI Life said in a regulatory filing. Net premium income increased% to ₹12,858 crore during the quarter under review from ₹10,111.51 crore a year ago.

Assets under management (AUM) grew to ₹1,86,360 crore as on September 30, 2020 from ₹1,54,760 crore in the year-ago period with debt-equity mix of 76:24. 90% of the debt investments are in AAA and sovereign instruments. The company has approved the grant of 9,24,690 stock options to eligible employees on July 21, 2020.

Source: Live Mint