In this edition, we have reviewed SBI Life Insurance Company Ltd. and Amara Raja Batteries Ltd. . We suggest our reader-investors to HOLD in SBI Life Insurance Company Ltd. and Amara Raja Batteries Ltd.
We had previously recommended SBI Life Insurance Company Ltd. in Volume No. 36, Issue No. 02 under the ‘Choice Scrip’ segment. The recommended price for the stock was Rs857.10. We had voted in favour of the stock on the basis of the company’s prudent approach to sustainable recovery to counter the post-pandemic slump. SBI Life Insurance is one of the most trusted life insurance companies which cater to individuals as well as group customers through protection, pension, savings and health solutions.
On a quarterly consolidated financial front, the income from premium was reported at Rs3,660.29 crore for Q4FY21, which is an increase of 45.21 per cent as compared to Rs2,522.21 crore reported for Q4FY20. The total premium income calculated for Q4FY21 rose significantly to Rs20,896.70 crore from Rs5,674.91 crore in Q4FY20. For Q4FY21, the company incurred a net profit of Rs532.38 crore as against net profit of Rs530.67 crore gained in Q4FY20, inching up by 0.32 per cent. On the annual front, for FY21 the company posted income from premium of Rs10,338.10 crore, which is an increase by 5.18 per cent compared to Rs9,828.79 crore for FY20.
The total premium income for FY21 rose by 87.22 per cent to Rs82,084.89 crore from Rs43,842.84 crore for FY20. For FY21, the company reported net profit of Rs1,455.85 crore as against net profit of Rs1,422.17 crore gained in FY20. The company has shown a track record of recovery from periods of disruption on he basis of a solid foundation of distribution network. Also, it has achieved a milestone of Rs500 billion of gross written premium. The company's private market share expanded by 141 bps whereas total market share expanded by 100 bps in FY21. Hence, with an optimistic outlook on further growth of the company in the life insurance space, we recommend HOLD.
We had previously recommended Amara Raja Batteries Ltd. in Volume No. 36, Issue No. 02 under the ‘Cover Story’ segment. The recommended price for the stock was Rs943.25. We had recommended the stock on the basis of its robust business model and the company’s optimistic future growth plans. Amara Raja Batteries is a technology leader and one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications in the Indian storage battery industry. ARBL is the preferred supplier to major telecom service providers, telecom equipment manufacturers, the UPS sector (OEM & Replacement), Indian Railways and to the Power, Oil & Gas, Motive among other industry segmentsThe financial performance of the company indicates that on a consolidated quarterly basis the net sales and other operating income was recorded at Rs2,102.61 crore in Q4FY21 as compared to Rs1,581.39 crore in Q4FY20, a rise of 32.96 per cent. The operating profit rose by 35.12 per cent from Rs257.91 crore in Q4FY20 to Rs348.49 crore in Q4FY21. The net profit improved by 37.93 per cent in the quarter which registered at Rs189.38 crore in Q4FY21 as compared to net profit of Rs137.30 crore in Q4FY20.
On the annual front, the net sales and operating income rose by 4.54 per cent from Rs6,839.17 crore in FY20 to Rs7,149.78 crore in FY21. The operating profit rose by 4.29 per cent in FY21 as compared to FY20. The net profit on annual basis dipped 2.11 per cent at Rs646.83 crore in FY21 as compared to Rs660.80 crore in FY20. The company is planning to remain focused on gearing itself for future opportunities in both the energy storage and mobility energy application via its pro-activeness in advanced cell technologies and creating sustainable products. Hence, we recommend HOLD.
(Closing price as of June 14, 2021)