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Top Stock Picks: 4 Insurance Stocks To Buy As Suggested By Emkay Global


The brokerage firm Emkay Global Financial Services Limited in its equity sector update has given an eye on the insurance sector and has picked up HDFC Life Insurance for a target price of Rs 670, ICICI Prudential Life for a target price of Rs 660, Max Financial for a target price of Rs 1,110 and SBI Life for a target price Rs 1,615 as its top picks with buy ratings.

Top Stock Picks: 4 Insurance Stocks To Buy As Suggested By Emkay Global

In its research note, the brokerage has said "The life insurance industry's growth momentum picked up in Mar'22, with retail weighted received premium (RWRP) growing by 11.9% YoY after two months of slow growth. The good show of Mar'22 led to FY22 RWRP growth of 15.7% YoY for the sector and 21.9% YoY for the private sector. Importantly, compared with the pre-Covid base, the private sector RWRP two-year CAGR in FY22 came in at 14.5% vs. a meager 1.6% for LIC, resulting in the private sector RWRP market share increasing by 5.7% in two years to 62.9% in FY22."

The brokerage has claimed that "Going into FY23, we expect overall RWRP growth to be ~12-13% YoY, with the private sector growing in the teens and LIC growing in the high-single digits. Powered by their brand and ubiquitous distribution strengths, listed private life insurers are in a position to grow strongly with relatively higher profitability. After the recent correction, the valuation is attractive. Our order of preference is SBILIFE (Buy), MAXF (Buy), HDFCLIFE (Buy) and IPRU (Buy)."

"For the life insurance industry, short-term disruptions have little impact on business and should be ignored, unless they alter the long-term story. And, the long-term story of these private life insurers, that they are sustainably gaining market share from LIC, remains unchanged. Beyond near-term turbulence, the sector's RWRP growth should broadly track nominal GDP growth, with private leaders growing faster than that and LIC growing slower. In addition, the strength of private life insurers' balance sheets and their business models has been well affirmed during the deadly second wave of Covid-19," Emkay Global Financial Services Ltd has said.

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Story first published: Wednesday, April 20, 2022, 14:22 [IST]
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