Due to the fall in the market due to geopolitical risk, the valuation of many insurance stocks has once again improved. Some stocks are at precovid level valuations.
Insurance Sector Stocks to Buy: The insurance sector has been in the news since the start of the COVID 19 pandemic in the country. There has been a lot of demand for insurance shares during this period. The business of the companies improved due to the increase in demand for insurance, whose effect was also seen in the form of growth in the stock. However, due to the recent fall in the market due to geopolitical risk, the valuation of many better insurance stocks has once again improved. Some stocks are trading at pre-covid level valuations. Brokerage house Emkay Global says that at the current level it is the right time to invest in the selected stocks. SBI LIFE is seen on the best position among them.
Growth slowdown due to high base
According to brokerage house Emkay Global Financial, there has been a slowdown in the growth of the industry in February. However, this has happened on an annual basis due to higher base effect. Retail weighted received premium (RWRP) grew just 5.2 per cent year-on-year in February. The sector’s YTD RWRP growth declined to 16.6 per cent due to lower growth in January and February.
The first 9 months of FY22 i.e. till December was 19.7 percent.
The RWRP growth in YTDFY22 on 2-year CAGR basis has been 10.5 per cent for the private life insurance sector, while -5.3 per cent for LIC. Due to this divergent growth trend, the private life insurance sector has gained 7 per cent market share from LIC in the last two years.
These stocks will rise
Given the recent slowdown in growth, a strong March 2021 base and the current macroeconomic and geopolitical risks, brokerage house Emkay Global expects the sector to see some sluggish growth in FY22. But the way insurance stocks have weakened in the recent correction, their valuations have become attractive. Some are trading below their precovid levels. The brokerage believes that SBI LIFE is in a better position to deliver great returns in the coming days. The brokerage has also predicted a rise in SBI Life, ICICI Pru, Max Financial.
HDFC Life Insurance
Rating: Buy
CMP: 522
Target: 830
ICICI Pru Life
Rating: Hold
CMP: 452
Target: 725
Max Financial
Rating: Buy
CMP: 790
Target: 1240
SBI Life
Rating: Buy
CMP: 1057
Target: 1720
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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