Stock Analysis

SBI Life Insurance (NSE:SBILIFE) Ticks All The Boxes When It Comes To Earnings Growth

Source: Shutterstock

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like SBI Life Insurance (NSE:SBILIFE). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide SBI Life Insurance with the means to add long-term value to shareholders.

View our latest analysis for SBI Life Insurance

How Fast Is SBI Life Insurance Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Over the last three years, SBI Life Insurance has grown EPS by 8.4% per year. That growth rate is fairly good, assuming the company can keep it up.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for SBI Life Insurance remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 45% to ₹1.0t. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

NSEI:SBILIFE Earnings and Revenue History September 26th 2023

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of SBI Life Insurance's forecast profits?

Are SBI Life Insurance Insiders Aligned With All Shareholders?

Prior to investment, it's always a good idea to check that the management team is paid reasonably. Pay levels around or below the median, can be a sign that shareholder interests are well considered. The median total compensation for CEOs of companies similar in size to SBI Life Insurance, with market caps over ₹665b, is around ₹94m.

The CEO of SBI Life Insurance only received ₹7.2m in total compensation for the year ending March 2023. That looks like a modest pay packet, and may hint at a certain respect for the interests of shareholders. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Does SBI Life Insurance Deserve A Spot On Your Watchlist?

One positive for SBI Life Insurance is that it is growing EPS. That's nice to see. To add to this, the modest CEO compensation should tell investors that the directors have an active interest in delivering the best for shareholders. So all in all SBI Life Insurance is worthy at least considering for your watchlist. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how SBI Life Insurance shapes up to industry peers, when it comes to ROE.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we're helping make it simple.

Find out whether SBI Life Insurance is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis