Buy These 3 Insurance Sector Stocks Recommended By Top Brokerage

Life Insurance Corporation (LIC)

LIC recently got listed on the stock exchange. The current market price (CMP) of LIC is Rs. 706.80 per share, it was opened at Rs 701.25 on NSE today. Motilal Oswal Suggests Buy for target price of Rs 830 per share. The brokerage is expecting an 18% potential gain if the investors buy shares at the CMP. The 52-week low of the share price is Rs. 650 per share, and the 52-week high is Rs 918.95 per share, respectively. The stock got listed on exchange negative, however, in past 1 week, its share price surged 3.58%. It is a large-cap stock with a market capitalization of Rs. 4,41516 crore.

According to Motilal Oswal, "LIC has all the levers in place to maintain industry-leading position and ramp up growth in the highly profitable product segments (mainly Protection and Non-PAR Savings / Annuity). However, changing gears for such a vast organization requires superior and well-thought execution that also has to endure frequent rotation at the top management level. We estimate LIC to deliver ~10% CAGR in NBP during FY22- 24 while VNB margin is likely to improve to 13.6%. However, we estimate its operating RoEV to remain modest at ~9.7% on lower margin profile than private peers. LIC's valuation at 0.7x FY24E EV appears reasonable considering the gradual margin recovery and diversification in business mix. Hence, we initiate coverage with a BUY rating and a TP of INR830 based on 0.8x FY24E EV."

HDFC Life Insurance Company

The current market price (CMP) of HDFC Life Insurance Company Ltd. (HDFC Life) is Rs. 555.75 per share, today opened at Rs 558 per share. Sharekhan maintains a buy call for a target price of Rs 740 per share. The stock sees a potential gain of 34% considering buying the stock at the CMP. The 52-week low is Rs 497.05 per share, and 52 week high is Rs 775.65 per share, respectively. It is offering a 0.31% dividend yield. The bank has not performed very well in the short term, but in the long term, it can be a good pick as it gave a 17.07% positive return in 3 years. In the last 1 month, it has given a negative return of 8.38%. The market capitalization of the company is Rs. 1,17,165 crore. It is a large-cap stock.

Sharekhan said, "We believe valuations are reasonable, as it has a well-diversified product bouquet (no segment contributing to more than 30% of APE), best-in-class branding, and strong metrics. We believe the company is well placed to deliver strong and sustainable long-term APE growth. Owing to strong fundamentals (robust balance sheet and consistent profitability) and high long-term growth potential for the Indian insurance industry in general and HDFC Life, in particular, we find it to be an attractive long-term bet. We maintain our Buy rating on the stock with an unchanged price target (PT) of Rs. 740."

Star Health and Allied Insurance Co.

The current market price (CMP) of Star Health and Allied Insurance Co. (Star Health) is Rs. 532.40 per share, opened at Rs 537.60 per share. ICICI Securities is expecting a 32% Return on Equity, considering the CMP & Target Price of Rs 700 per share. Its 52-week low is Rs. 469.05 per share, while the 53-week high is Rs 940 per share. The share price of the company has surged by around 8.84% in the past 1 week, although in the past 1 month, it has given a negative return of 24.03%. The market capitalization of the bank is Rs. 30,612.02 Crore.

ICICI Securities said about the Star Health stock, "We value the stock with a revised target price of Rs700 based on 40x (earlier 50x) FY24E EPS of Rs17.5 (earlier 16.7). We factor GDPI CAGR of 16.5% between FY22- 24E, investment leverage of 2.3x in FY24E, combined ratio of 95% and investment yield of 7% for FY24. Our change in multiple reflects the possibility of heightened competition, subsequent covid waves and overall increase in the cost of capital."