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SBI Life Insurance IPO review (Apply)

Review By Dilip Davda on Sep 13, 2017

SBI Life Insurance Co. Ltd. (SBI Life) is a life insurance arm of SBI group that is coming out with a public offer after 23 years gap. Last issue was in 1994 for SBI.

SBI Life India’s largest private life insurer, in terms of New Business Premium generated in each fiscal year, since Fiscal 2010. It has also increased its market share of New Business Premium generated among private life insurers in India, from 15.87% in Fiscal 2015 to 20.04% in Fiscal 2017. Between Fiscal 2015 and Fiscal 2017, SBI Life’s New Business Premium generated increased at a CAGR of 35.45%, which is the highest among the top five private life insurers (in terms of total premium in Fiscal 2017) in India.

In Fiscal 2017, the company enjoyed a market share of Individual Rated Premium of 20.69% among private life insurers in India and 11.16% of the entire life insurance industry in India. Between Fiscal 2015 and Fiscal 2017, its Individual Rated Premium increased at a CAGR of 37.90 %, the highest among the top five private life insurers and has also issued the highest number of individual life policies annually among the top five private life insurers in India since Fiscal 2014.

SBI Life was established as a joint venture between the State Bank and BNPPC in 2001. As of March 31, 2017, State Bank was India’s largest commercial bank in terms of deposits, advances and number of branches. Following its recent merger with certain of its associate banks and a non-affiliate bank, with effect from April 1, 2017, State Bank had 24,017 branches and 195 international offices in 36 countries and more than 420 million customers that will be geared up in marketing channel before this fiscal end. BNPPC, an insurance subsidiary of BNP Paribas, with operations across 36 jurisdictions internationally, is among the leading credit life insurance businesses globally. BNP Paribas was a top 10 global financial institution in terms of revenues in 2016.

As of July 31, 2017, SBI Life had a comprehensive product portfolio of 37 individual and group products (of which eight products are group products), including a range of protection and savings products to address the insurance needs of diverse customer segments. It has strong solvency ratio of 2.11 x as on 30.06.17 as against regulatory minimum of 1.50 x.Its 11.6% expense ratio is lowest amongst the peers.

SBI Life is coming out with a maiden IPO by way of offer for sale of 120000000 equity share of Rs. 10 each via book building route with a price band of Rs. 685-700 per share. Out of the total issue it has reserved 2000000 equity shares for eligible employees and 10 per cent i.e. 12000000 equity shares for the share holders of SBI. Issue opens for subscription on 20.09.17 and will close on 22.09.17. Minimum application is to be made for 21 shares and in multiples thereon, thereafter. With this issue, SBI Life hopes to mobilize Rs. 8220 crore to Rs. 8400 crore (based on lower and upper price bands). Employees are offered a discount of Rs. 68 per share. The offer would constitute up to 12% of post offer paid up capital of the company. Post allotment, shares will be listed on BSE and NSE. BRLMs to the offer are JM Financial Institutional Securities Ltd., Axis Capital Ltd., BNP Paribas, Citigroup Global Markets India Pvt. Ltd., Deutsche Equities India Pvt. Ltd., ICICI Securities Ltd., Kotak Mahindra Capital Co. Ltd. and SBI Capital Markets Ltd. Karvy Computershare Pvt. Ltd. is the registrar to the issue. It’s paid up equity capital will remain same at Rs. 1000 crore post issue. This is the second IPO from the Life Insurance Company on Indian bourses. It has issued entire equity at par so far. Object of the issue is to list on bourses and unlock value for its stakeholders.

On performance front, SBI Life has reported total income/net profits of Rs. 17369.42 cr. / Rs. 727.75 cr. (FY14), Rs. 23186.49 cr. / Rs. 814.87 cr. (FY15), Rs. 19119.72 cr. / Rs. 844.10 cr. Rs. 30277.51 cr./ Rs. 954.65 cr. (FY17). For Q1 of the current fiscal it has reported net profit of Rs. 313.45 cr. on a total income of Rs. 6388.37 crore. If we annualize the latest earnings and attribute on the post issue equity then asking price is at a P/E of around 55. For last three years it has posted an average EPS of Rs. 8.95 and average RoNW of 19.35%. Issue is priced at a P/BV of 11.90. Thus issue is fully priced compared to its only listed peer ICICI Prudential.

On BRLM’s front, 8 BRLMs associated with the offer have handled 56 public issues in past three years out of which 16 issues closed below the issue price on listing date.

Conclusion: Life insurance sector is expected to fare better. Investment may be considered for long term.


Conclusion / Investment Strategy

Life insurance sector is expected to fare better. Investment may be considered for long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Sep 13, 2017

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

SBI Life Insurance IPO FAQs

  1. 1. Why SBI Life Insurance IPO?

    The initial public offer (IPO) of SBI Life Insurance Company Ltd offers an early investment opportunity in SBI Life Insurance Company Ltd. A stock market investor can buy SBI Life Insurance IPO shares by applying in IPO before SBI Life Insurance Company Ltd shares get listed at the stock exchanges. An investor could invest in SBI Life Insurance IPO for short term listing gain or a long term.

  2. 2. How is SBI Life Insurance IPO?

    Read the SBI Life Insurance IPO recommendations by the leading analyst and leading stock brokers.

    • Ajcon Global Services Ltd - Apply
    • Centrum Wealth Management - May apply
    • Dilip Davda - Apply
    • GEPL Capital Ltd - Apply
    • Hem Securities - Apply
    • Quant Capital lTd - Apply
    • SPA Financial Advisor Ltd - Apply
    • Way2Wealth Securities - Apply
  3. 3. SBI Life Insurance IPO what should investors do?

    SBI Life Insurance IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the SBI Life Insurance IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is SBI Life Insurance IPO good?

    Our recommendation for SBI Life Insurance IPO is to subscribe.

  5. 5. Is SBI Life Insurance IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the SBI Life Insurance IPO.

  6. 6. When will SBI Life Insurance IPO allotment status?

    The SBI Life Insurance IPO allotment status will be available on or around Sep 27, 2017. The allotted shares will be credited in demat account by Sep 29, 2017. Visit SBI Life Insurance IPO allotment status to check.

  7. 7. When will SBI Life Insurance IPO list?

    The SBI Life Insurance IPO will list on Tuesday, October 3, 2017, at BSE, NSE.

9 Comments

9. DINESHSINH RAJPUT  Sep 22, 2017 11:04:54 AM
I want advise about SBI life i want to apply for 231 share Rs.1.60 lakh. Suggest me apply or not?
8. Ashish Dhanani  Sep 18, 2017 5:57:07 PM
Sir plz suggestion for ipo
SBI life insurance
and
icici Lombard
Can apply ?
I hope you sir help me ..
8.1. Ramesh  Sep 19, 2017 7:37:25 PM
Do not apply for ICICI Lombard.
7. IPO EMPEROR  Sep 20, 2017 7:21:52 PM
Agree Dilip sir but pricing in bull market is so high that if market fall then it may take 5+ years.....to make a decent profit......
7.1. Puja Grovar  Sep 20, 2017 8:33:28 PM
I am agree with above analysis. Yes this is also right pricing is so high, but it justfy for long term investors.
6. JitendraShah  Sep 20, 2017 11:41:07 AM
Sbi life mein shareholder can apply in both category....individual and shareholder quota??
5. Wealth of Nation  Sep 19, 2017 11:12:54 PM
Where is the review only available facts have been stated.