desk
Share
News Topical, Digital Desk : Brokerage firm Motilal Oswal has recommended buying two insurance stocks in its Sector of the Week report. Motilal Oswal stated in its report that the Indian life insurance sector continues to show strong growth. The sector is experiencing slower headline growth and strengthening business quality. Monthly data shows the industry's new business premiums grew in the high single digits year-on-year, reflecting stable demand despite last year's high base and regulatory adjustments. While growth has normalized from its previous peak, fundamentals remain the same, supported by an improved product mix, greater distribution reach, and continued protection awareness in urban and semi-urban markets.
Positive points for the sector
According to the brokerage firm, a key development this year is a gradual shift towards more balanced product contributions. Individual annual premium equivalent growth has remained stable, with participating and non-participating savings products regaining popularity after a phase of recalibration.
Structural demand remains strong in the protection and annuity segments, supported by increasing financialization of household savings and retirement planning awareness. While group business growth has been relatively inconsistent due to seasonality and corporate budgeting cycles, individual business contributions remain a stabilizing force for the sector.
Increased long-term confidence
Motilal Oswal said that while short-term growth for the insurance sector may appear lower compared to the rapid growth seen in previous cycles, the sector is entering a phase characterized by a healthy mix, disciplined underwriting, and a sustainable margin profile.
Regulatory clarity and product standardization efforts have increased transparency and long-term confidence in the ecosystem. Insurance penetration in India remains below the global average, and financial savings continue to shift toward formal instruments, structural growth drivers remain strong. Find out more about the stocks to invest in.
SBI Life Insurance
Motilal Oswal has given a target of Rs 2570 for SBI Life Insurance, while its stock closed at Rs 2,035.05 on Friday. This means it can give a return of more than 26% from the current price. According to Motilal Oswal report, SBI Life Insurance delivered a strong operating performance in 3QFY26, with New Business APE (Annualized Premium Equivalent) growing by 24% YoY (year-on-year) to ₹86 billion and Absolute VNB (Value of New Business) growing by 22% YoY to ₹22.9 billion, which translated into a healthy VNB margin of 26.6% despite the 110 basis point GST impact.
Growth was broad-based across products and channels, with individual protection growing 29% YoY, annuities growing 43% YoY, and participating products gaining strong traction. AUM grew 16% YoY to ₹5.1 trillion, solvency remained at a comfortable level at 1.91x, and persistency trends remained largely stable.
Max Financial Services
The second stock recommended by Motilal Oswal is Max Financial Services. It closed at Rs 1826.45 on Friday, up ₹12.80, or 0.71%. The target for this stock is Rs 2200, meaning the stock could deliver a 20% return. Max Financial
Services, through Axis Max Life Insurance, is delivering the best growth in the industry, driven by strong growth in annualized premium equivalents and consistently improving value of new business margins. The company recorded strong double-digit growth in APE and VNB, with margins exceeding 24%. This was driven by a strong product mix shift towards higher-margin protection and non-participating savings products and a reduction in unit-linked contributions.
According to the brokerage, with disciplined margin management, strong operating leverage, and a balanced product strategy, Max Financial Services is well positioned to maintain strong growth in the life insurance sector.
Read More: Before starting a SIP, what are the biggest misconceptions? An essential guide for investors.
--Advertisement--
