3 weeks ago
Jefferies Sees 40% Upside in SBI Life, Raises Target Price
Jefferies is a company that helps investors decide which stocks are good to buy.
It looked at SBI Life Insurance, a company that sells life insurance in India.
Jefferies thinks SBI Life's stock is worth a lot more than its current price.
In fact, it believes the stock could go up by about 40%.
This is because SBI Life had a really strong first quarter.
It sold many more insurance policies than it did a year earlier.
One very large group insurance policy helped boost its sales.
Even though a part of its profit margin shrank, Jefferies still says SBI Life is its favourite life insurance company.
It expects the company's profit margins to improve by 2028.
Jefferies retained its 'Buy' rating on SBI Life Insurance and raised its target price to Rs 2,600, implying roughly 40% upside from current levels.
SBI Life's Q1FY27 Value of New Business (VNB) came in 19% ahead of Jefferies' estimates and 13% above market expectations.
Annualised Premium Equivalent (APE) grew 36% year-on-year, supported by a large group term insurance policy, while VNB grew 29% YoY.
The VNB margin slipped about 125 basis points year-on-year to 26.2%, hurt by loss of input tax credit, an unfavourable product mix and changed operating assumptions.
Jefferies raised its FY27-FY29 VNB estimates by 1-3%, holds SBI Life as its top pick in life insurance, and values it at 16x September 2028 estimated VNB.
- Who
- Jefferies, a global brokerage house, and SBI Life Insurance, the life insurer under review.
- What
- Jefferies retained its 'Buy' rating and raised its target price for SBI Life to Rs 2,600, implying about 40% upside, after the insurer's better-than-expected Q1FY27 results.
- Where
- India, in the context of the Indian life insurance and stock market.
- When
- Following the release of SBI Life's Q1FY27 results.
- Why
- Because SBI Life delivered strong premium and new business value growth, and Jefferies expects improving margins from a product-mix shift, stabilising costs and a favourable GST base effect.
Key facts
- Brokerage
- Jefferies
- Rating
- Buy (retained)
- Target Price
- Rs 2,600 (~40% upside)
- Q1FY27 APE Growth
- 36% YoY
- Q1FY27 VNB Growth
- 29% YoY
- VNB Margin
- 26.2%, down ~125 bps YoY
- Group Protection APE
- Rs 1,230 crore in Q1FY27
- Valuation
- 16x September 2028 estimated VNB
Quotes
Jefferies brokerage
Global brokerage house Jefferies
“We continue to see upside to margin guidance (26-28%) considering ongoing mix shift away from ULIPs, growing share of pure protection, costs stabilizing and GST impact being in the base from 2H.”
financialexpress.com
“SBI Life remains our top pick in life insurance.”
financialexpress.com
Sources
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