The life insurance sector has witnessed a glorious rally this year. However, the scenario seems a little bit off currently after all the 3 companies seem to have taken a break from their earlier run towards lifetime highs.
Since last month, the life insurers have fallen from their record-high levels. HDFC Life Insurance saw the biggest fall of 8.29 percent since November 1, 2019. Meanwhile, SBI Life Insurance and ICICI Prudential Life Insurance slipped 3 percent and 2 percent respectively.
On a year-to-date (YTD) basis, the life insurance space saw substantial growth of 51-59 percent compared to Nifty’s growth of 11 percent.
One of the reasons behind this slowdown in the life insurance space is individual annual premium equivalent (APE), which has slowed down to 10 percent YoY v/s 15 percent during April to July period.
Furthermore, LIC has become aggressive on its new products which are now grabbing market share from the listed insurers.
HSBC Global Research in its report adjusted target prices (TP) of the three stocks as per the current industry situation.
“With the exception of ICICI Prudential, both HDFC Life and SBI Life are trading close to their peak P/EVs. Both industry growth and individual company growth has slowed in the past three months; ICICI Prudential has remained largely flat,” the report said.
The global brokerage maintained ‘buy’ on ICICI Prudential and increased the TP from Rs 470 to Rs 540. It maintained ‘hold’ on HDFC Life and increased TP from Rs 510 to Rs 540. However, it downgraded SBI Life to ‘hold’ on valuation grounds but raised its TP from Rs 945 to Rs 1,005, which implies an upside of 3 percent.