Shares of SBI Life Insurance Co. Ltd. hit an all-time high on Thursday after brokerages raised the price target for the stock after the company's net profit jumped 37% in the quarter ended June and beat analysts' estimates.
Motilal Oswal Financial Services Ltd. maintained a 'buy' rating and raised the target price to Rs 1,900 apiece from Rs 1,700 earlier, implying a potential upside of 16.35% from the previous close. Citi Research also raised the target price to Rs 2,000 per share from Rs 1,950, indicating a potential upside of 22.5%.
SBI Life Q1 FY25 Earnings Highlights (YoY)
Net premium income up 15% to Rs 15,106 crore versus Rs 13,105 crore.
Net profit up 37% at Rs 520 crore versus Rs 381 crore (Bloomberg estimate: Rs 419 crore).
New product launches are likely to kick-start the recovery in the protection segment and the impact of surrender charges is likely to be minimal. The company continues to maintain its cost leadership, according to Motilal Oswal. "Considering the seasonality, the SBI channel is anticipated to see recovery in growth in 2Q and 3Q."
Citi said the company's valuation discount to HDFC Life Insurance Co. and ICICI Prudential Life Insurance Co. remained high at around 35% and 25% respectively. "We expect the valuation discount to narrow," it said. "Steady value of new business growth, sustained investment in agency and robust operation ROEV (return on embedded value) underpin constructiveness."
SBI Life's stock rose as much as 3.17% during the day to Rs 1,684.7 apiece on the NSE. It was trading 1.91% higher at Rs 1,662.85 per share, compared to a 0.45% decline in the benchmark Nifty at 10:34 a.m.
The share price has risen 16.13% on a year-to-date basis and 29.7% in the last 12 months. The total traded volume so far in the day stood at 1.6 times its 30-day average. The relative strength index was at 70.44, indicating that the stock may be overbought.
Thirty-two out of the 33 analysts tracking the company have a 'buy' rating on the stock and one recommends 'hold', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 12.7%.
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