
Investec has provided its outlook on key insurance stocks, recommending a pair trade strategy of going long on SBI Life and short on ICICI Prudential Life. Both stocks have been assigned a hold rating by the brokerage firm.
Key highlights:
- Stock ratings and targets:
- SBI Life: Target price at ₹1,850/share.
- ICICI Prudential Life: Target price at ₹770/share.
- Performance trends:
- ICICI Prudential Life showed high growth in recent months, while SBI Life experienced slower growth.
- The base effect is expected to become favorable for SBI Life starting January 2025, potentially boosting performance.
- Key factors affecting ICICI Prudential Life:
- Incremental growth for ICICI Prudential Life is heavily reliant on equity markets due to a higher share of equity in ULIP AUM.
- The stock trades at a premium valuation compared to SBI Life in terms of P/VNB.
Investec’s analysis indicates that the insurance sector is influenced by growth dynamics, equity market dependence, and valuation disparities, with SBI Life positioned to benefit from a favorable base impact in 2025.
Disclaimer: This article is for informational purposes only and does not constitute financial advice.