Shares of 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 margin outlook in the industry as it picked this stock as its best bet in the insurance sector.

Nuvama: Buy | Target: Rs 1,670

Due to the changing mix, Nuvama has tweaked FY25E/26E VNB (value of new business) lower by 4%/4%, but has rolled over to FY26E results with an increased target price of Rs 1,670 as it maintained a ‘Buy’. The state-run life insurer reported healthy Q3FY24 APE growth though it missed Nuvama’s expectations by 1%. In Q3FY24, VNB growth was tepid as increased ULIP sales (+18% YoY) further dented margins by 42bp YoY to 27.4%, the brokerage noted.

“A growth vector for SBI Life is parent SBI and a strong agency force. SBI LIFE also has among the lowest-cost ratios, adding to our comfort,” Nuvama said in a note.

Motilal Oswal: Buy | Target: Rs 1,700

Motilal Oswal reiterated a buy on SBI Life for a price target of Rs 1,700 valued at 2.3X September 26E EV. Calling the company’s Q3 performance “decent”, Nuvama said that APE and VNB were above estimates though the margins contract by 40 bps YoY.

“SBI channel productivity has been improving and the company is working on improving its efficiency in the agency channel. SBI Life continues to maintain its cost leadership. We expect SBILIFE to deliver 18% CAGR in APE over FY23-26, thus enabling a 16.4% VNB CAGR,” the Motilal note said.

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