SBI Life shares jump 3% post Q3 results. Should you buy?
SBI Life Insurance Company jumped nearly 3% to the day's high of Rs 1420.15 on the BSE on Monday following the company's decent December quarter earnings.
Brokerages remain optimistic about the prospects of the state insurer, with Jefferies and CLSA reiterating their buy views on the counter. The latter also raised the price target, highlighting the company's wide presence as an advantage. Among domestic brokerages, Motilal Oswal and Nuvama maintained their buy views.
SBI Life on Thursday reported a net profit of Rs 322 crore for the quarter ended December, up 6% from Rs 304 crore posted in the same quarter last year. Net premium income for the third quarter increased 16% year-on-year (YoY) to Rs 22,316 crore.
Read More: SBI Life Q3 Results: PAT rises 6% YoY to Rs 322 crore; net premium income jumps 16%
Here's what brokerages said:
Jefferies: Buy | Target: Rs 1,700
Jefferies has maintained a buy on SBI Life for a price target of Rs 1,700. In its post-earnings stock review, the US-based brokerage said that softer premium growth was led by ULIPs even as the retail protection segment fell by 12%. The Q3 margins moderated due to a weaker mix. The brokerage note also highlighted company management's silence over the news of the acquisition of Bharti Axa Life Insurance.
CLSA: Buy | Target Rs 1,730
CLSA maintained a buy rating and raised the price target to Rs 1,730 from Rs 1,620. The Q3 commission was up 25% YoY versus 74%-94% for peers. There was a limited impact of surrender value regulations as per the management, CLSA highlighted. While the competition is set to rise, SBI's wide presence gives it an advantage, this brokerage said.
In CLSA's view, SBI Life has the best APE (annual premium equivalent) growth and
