SBI Life Insurance Co. Limited shares jumped over 6% in early trade on Wednesday after Deutsche Bank maintained its ‘buy’ rating on the stock with a target price of Rs 830. The SBI Life stock hit an intraday high of Rs 715, its highest level in 52 weeks.
At 10.11am, the stock was trading at Rs 707.90, up 5%, on NSE. Deutsche Bank said that the management of SBI Life sounded confident of achieving higher growth in FY20 and expects lower-margin RoP (return of premium) products to decline in protection mix.
Return of premium is a term plan with death benefits, in which, if the policyholder survives the policy term, it returns the premium that’s paid. Deutsche Bank also expects SBI Life’s VoNB (value of new business) margin to expand by 100 basis points in FY20.
SBI Life shares had fallen nearly 5% on Tuesday after foreign partner BNP Paribas Cardif said it will sell up to 2.5% stake in the company.
On 24 June, after market hours, SBI Life informed BNP Paribas Cardif would sell up to 25 million shares for at least Rs 1,625 crore through an offer for sale (OFS) mechanism. The two-day OFS will remain open till 26 June, SBI Life Insurance said, adding the floor price is fixed at Rs 650 per share, which is at an 8.5% discount to the 24 June closing price on BSE.
BNP Paribas Cardif has been gradually selling its stake in SBI Life Insurance. Earlier in March, it had sold 50 million shares for Rs 2,889 crore.
In the same month, Carlyle Group had acquired 9% stake in the life insurer from BNP Paribas Cardif.
Comments
0 comment