Private life insurers shares in demand as CLSA upbeat on HDFC Life, SBI Life, ICICI Pru life and other stocks

CLSA believes the near-term growth of life insurance companies could see an impact from pre-buying in February-March 2023 and besides, insurers are preparing for mitigating growth factors. The brokerage upgraded its stance on HDFC Life, SBI Life, ICICI Pru Life, Max Financial Services.

According to CARE Edge Ratings, private insurance companies continued their growth momentum in February - Image Source: Pixabay

Private life Insurance companies’ shares were in demand during Wednesday’s trading session as the global brokerage firm CLSA was upbeat on the sector mainly on the better growth outlook.

CLSA believes the near-term growth of life insurance companies could see an impact from pre-buying in February-March 2023 and besides, insurers are preparing for mitigating growth factors.

The brokerage has upgraded the ratings of HDFC Life, SBI Life, and Max Financial, and maintained a ‘buy’ rating on ICICI Prudential with an increased target price on all stocks.

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CLSA has upgraded HDFC Life to an ‘underperform’ from a ‘sell’ rating; while it upgraded SBI Life to ‘buy’ from ‘outperform’ and Max Financial Services to a ‘buy’ from ‘underperform’ stance.

CLSA	Rating	Price Target
HDFC Life Insurance	Underperform	Rs 460
SBI Life Insurance	Buy	Rs 1,225
ICICI Pru Life Insurance	Outperform	Rs 485
Max Financial Services	Buy	Rs 780

Shares of private life insurers such as HDFC Life Insurance, SBI Life Insurance, and ICICI Prudential Life Insurance each gained between 3-4 per cent, while Max Financial Services stock jumped nearly 7 per cent intraday on the BSE.

According to CARE Edge Ratings, private insurance companies continued their growth momentum in February and extended their lead in the individual non-singe premium segment.

It said that the insurance demand is positively correlated with economic growth and grows at a multiple to the GDP (Gross Domestic Product), hence the top line of life insurers is anticipated to remain healthy for FY23 as it would be the first full year without any Covid-related restrictions.

The growth would also be driven by a supportive regulatory landscape like the ease of doing business and Bima Sugan, a push to increase insurance coverage, product innovations/customization, and allowing corporate agents to take on additional companies, the rating agency report said.

Meanwhile, the sector is expected to continue its trajectory after companies tweak their policies to drive growth; however, given the protection gap and insurance requirements, the long-term growth of the life insurance segment remains intact, according to CARE Edge ratings' report.

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