Buy SBI Life Insurance Company, target Rs 840: HDFC Securities

HDFC Securities has a buy call on SBI Life Insurance Company with a target price of Rs 840.

The current market price of SBI Life Insurance Company is Rs 683.40.

Time period given by the brokerage firm is a year when SBI Life Insurance Company price can reach defined target.

"SBI Life Insurance is a play on the under–penetrated Life Insurance market, with a strong distribution footprint of its parent SBI. Given the untapped distribution reach, along with tailwinds towards the financialisation of savings, we expect 18.9 per cent and 29.5 per cent CAGR growth between FY17-20E in the New Business Premium and Value of New Business for SBI Life Insurance. Besides this, in recent Budget Government has proposed to introduce LTCG on Equity and Mutual Fund investments. So now Investors will be more attracted to unit linked life insurance products (ULIPs) as the income from this is free in the hand of the investor at the time of withdrawal. SBI Life is currently trading at 2.5x P/EV for FY20. We recommend SBI Life as a BUY at CMP of Rs 689 and add on decline of Rs 642 for the target of Rs 840 in a years’ time frame," HDFC Securities said in a report.