Should you buy SBI Life Insurance ? - Stock Fundamental Analysis
Should you buy SBI Life Insurance ? - Stock Fundamental Analysis
State Bank of India, the country's largest Public sector bank and also the 43rd Largest bank in the world. SBI Life Insurance is a joint venture between SBI and BNP Paribas, the French International banking group. BNP Paribas is the eighth largest bank globally in terms of Assets.
SBI Life was incorporated in the year 2000 and then registered with the IRDAI (Insurance Regulatory and Development Authority of India) in 2001. Now, State Bank of India owns 55 Percent stake in SBI Life Insurance and BNP Paribas with 5 Percent.
It is noteworthy that the BNP held a 22 Percent stake in the SBI Life Insurance earlier. There are around 26 Percent of stake with the Foreign Institutional Investors(FII) in this Insurance listed company. SBI Life insurance operates its business in the Insurance Segment in India.
The Company has about 17,000 employees and 1.5 Lakh Insurance agents. The services are provided in many Corporate houses and bancassurance network also. It has also more than 28,000 Partner branches and hundreds of Broking firms to provide the Insurance Service.
According to the 2017-18 Financial report, the company manages Asset under Management(AUM) of more than Rs.1 Lakh Crore. At the end of last financial year 2019-20, SBI Life was also named as the best company in the Private insurance segment in India.
The SBI Life insurance has a Market Capitalization of Rs.90,000 Crore. It is a virtually debt free company, the promoters holding is around 60 Percent and there is no pledging of shares by the Promoters side.
As per 2019-20 Financial year, the company's Gross written premium was Rs.30,000 Crore. The company had a revenue of Rs.43,78 Crore and Net profit of Rs.1,422 Crore in the end of 2019-20 fiscal year.
The Company's Compounded Sales have grown by 13 Percent and Profits by 12 Percent over the past five years. It is noteworthy that the Return on Equity is around 18 Percent over a 5 year period. The Book value is about 97 rupees and the Stock Price to earning ratio is around 56 times, as the Industry PE is said to be 59 Times.
For SBI Life Insurance company, the balance sheet reserve was Rs.8,663 Crore as per September 2020 Quarterly report. The Return on Capital Employed(ROCE) is around 22 Percent for the past 5 years. The Performance of Private companies are better than the Public sector companies in the Insurance Industry based on Top and Bottom line growth.
SBI Life insurance is more favorable to the stock investors as it meets the Fundamental things on Stock Valuation. Due to rising demand, Growth aspect and Rapid service with Technology, the Insurance segment is a recommendable one for the Diversification. Keeping Asset Allocation is also important when it comes for the Stock Diversification.
This Life Insurance company completes a Stock Fundamental analysis and currently it is trading around Rs.900 Per Share, where the Discounted Cash Flow valuation recommends with a price of Rs.800-1000 per share.
Those who want to diversify their Investment Portfolio, one can pick this Insurance Industry companies for the Long term capital appreciation. Generally, investors are advised to make their investment decision in the presence of appropriate Financial Advisor or Stock Advisor before buying any shares which is discussed here. The said above information of a stock is only for the learning of Fundamental Insights.
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