Brokerage firm Motilal Oswal Financial Services has advised buying two shares of the insurance sector in its ‘Sector of the Week’ report. According to the report, the Indian life insurance industry is showing signs of strength.
Business News: Amid signs of stability and quality improvement in the Indian life insurance industry, leading brokerage house Motilal Oswal Financial Services has advised investment in two leading stocks. In its “Sector of the Week” report, the firm described SBI Life Insurance and Max Financial Services as having strong long-term prospects.
According to the brokerage, even though the headline growth of the insurance sector appears to be slower than in previous years, the improvement in business quality, margin profile and product mix is making it attractive for investment.
Stable demand and structural strength in the insurance sector
Recent monthly data indicates that the industry has recorded high single-digit growth in new business premiums year-on-year. This growth remains despite last year’s high base and regulatory adjustments, reflecting the stability of demand. According to the brokerage, insurance companies are now moving towards balanced product contribution. Individual Annual Premium Equivalent (APE) growth has remained stable, while participating and non-participating savings products are seeing a revival.
Additionally, there remains structural demand in the protection and annuity segments, supported by increasing financialization of household savings and awareness of retirement planning.
SBI Life Insurance: Potential returns over 26%
Motilal Oswal has set a target price of ₹2,570 for SBI Life. This represents about 26% potential upside from the recent closing price of ₹2,035.05. As per the brokerage report, the company delivered strong operating performance in Q3 FY26. New Business APE recorded 24% YoY growth and reached ₹86 billion.
At the same time, Value of New Business (VNB) increased by 22%, which stood at ₹22.9 billion. VNB margins remained strong at 26.6%, while the company maintained profitability despite the GST impact.
- 29% YoY growth in individual protection segment
- 43% YoY growth in annuity business
- Assets under management (AUM) increased by 16% to ₹5.1 trillion
- Solvency ratio strong at 1.91x
The brokerage believes that the strong distribution network, better product mix and stable persistence trends keep SBI Life well positioned for long-term growth.
Max Financial Services: 20% upside potential
Motilal Oswal has given a target of ₹2,200 for Max Financial Services. Based on the recent closing price of ₹1,826.45, this indicates a potential return of around 20%. The company, through its subsidiary Axis Max Life Insurance, is recording strong APE and VNB growth in the industry.
- Double-digit growth in APE and VNB
- VNB margin more than 24%
- Leaning towards protection and non-participating savings products
- Reduction in dependence on unit-linked products
According to the brokerage, disciplined margin management, good operating leverage and balanced product strategy keep the company on a path to stable and sustainable growth.
Comments are closed.