SBI Life slips on profit booking after hitting fresh 52-week high

Shares of SBI Life Insurance Company surged 5 per cent to Rs 1,005 on the BSE in intra-day trade on Tuesday after the company reported healthy premium growth, improved profitability and strong value of new business (VNB) margin uptick. The stock hit a 52-week high today, quoting close to its record high level of Rs 1,030, touched on October 30, 2019.

However, at 09:42 am, the stock had erased its entire morning gain, and was trading 1 per cent lower at Rs 948, falling 6 per cent from its intra-day high. In comparison, the S&P BSE Sensex was flat at 48,713 points. In the past one week, the stock has outperformed the market by gaining 8 per cent, against 0.18 per cent decline in the benchmark index.

For Q4FY21, SBI Life posted net premium growth of 31 per cent year on year (YoY) to Rs 15,556 crore, led by new business premium growth of 63 per cent YoY at Rs 6,187 crore, while renewal premium grew 16 per cent YoY to Rs 9,459 crore. AUM was up 38 per cent YoY to Rs 220,870 crore.

NBP witnessed sequential pick-up in growth and was up 13.8 per cent quarter on quarter (QoQ) to Rs 6,189 crore. Protection business continued to report strong growth at Rs 840 crore vs. Rs 710 crore QoQ. Due to increased quantum of protection and non-par business, VNB margins showed improvement from 19.3 per cent to 20.4 per cent QoQ. Management expense ratio improved to 8.0 per cent versus 9.9 per cent YoY, ICICI Securities said in a note.

SBI Life reported a robust quarter, with strong New Business Annualized Premium Equivalent (APE) growth led by recovery in ULIP and continued strong traction in Non PAR/Annuity and Individual Protection. Also, it reported strong VNB growth of 93 per cent YoY – on an effective tax rate (ETR) basis – with margins improving sharply to 27.7 per cent. FY21 VNB margins improved to 23.2 per cent, Motilal Oswal Securities said.

However, we remain watchful of the impact of the lockdowns announced in various key states due to the resurgence in COVID cases. SBI Life continues to maintain its cost leadership, while persistency trends have also improved, the brokerage firm said in results update.