SBI Life Insurance is all set with IPO Offerings


SBI Life is one of the leading Life Insurance companies in India, which has joint venture between India’s largest bank State Bank of India and the leading global insurance company BNP Paribas Cardif. In which SBI owns 70.1% and BNP Paribas Cardif owns 26% of the total capital in SBI Life respectively. In each financial year since 2010 SBI Life is India’s largest private life insurer in terms of NBP generated.

SBI Life is all set with the Rs 8,400 crore initial public offering (IPO) to hit the market on 20th September. In the same Financial year insurance company has set the target of growth by 35-40 percent in new business premium (NBP) collection and price band for the issue at Rs 685-700 per share, according to a report.

SBI Life carries consistent & healthy position among all insurance companies, at the upper end of the price band at Rs 700, the issue is priced at 4.2 times its FY17 embedded value of Rs 165 per share, which is higher than ICICI Prudential’s 3.8 times its FY17 EV. According to the analysts, this all is because of the brand value of SBI Life.

Following a brokerage we found that, the issue seems fairly priced, considering SBI Life is a market leader in most of the parameters – private market share of 20 percent in NBP against HDFC Life’s 17.2 percent, ICICI Prudential’s 15.5 percent Max Life’s 7.2 percent highest renewal premium CAGR over FY14-17 at 24.2 percent compared with private peer average of 13.8 percent CAGR; least cost ratio of 11.6 percent compared with 18 percent of that of peers. Going ahead, the company is expected to benefit further from the vast bancassurance and private agent network along with its extensive reach and market share. In August SBI Life has registered over 50 percent growth in annual premium equivalent, largely driven by a rise in ticket size, indicating sustained momentum in Ulips.

Brokerage Edelweiss, Securities believe rising financial savings and higher inflows post demonetization is helping the industry register impressive growth. The brokerage anticipates proclivity for financial savings to continue and the ongoing industry growth momentum to sustain going forward. .


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