SBI Life Insurance Company Ltd. share price target

We remain positive on the stock and maintain Buy with a Target Price of Rs 998 (2.8x FY22EV)

Strong recovery in GWP led by protection & group savings SBI Life delivered 28% YoY growth in GWP mainly from renewal & single premium, while some recovery in regular premiums. This has led to APE recovery with de-growth of -4%/-15% YoY in Q2/H1FY21 vis--vis -32% YoY de-growth in Q1FY21. New business was driven by group savings, protection and recovery in ULIP. This change in business mix kept the margins steady at 18.8% (PLe of 19.6%) as recovery in ULIP offset the protection margin benefit. Improving protection mix and other higher margin products will help...

SBILIFE reported a 28% YoY increase in GWP to Rs. 130.9bn in Q2FY21 driven by strong renewal premium and single premium, which grew 28% and 71% respectively to Rs 71.5bn and Rs 36.2bn. APE declined 3.5% YoY to Rs. 27.1bn but more than doubled sequentially. The savings APE declined 9.2% to Rs. 23.7bn while the protection APE grew 70% to Rs. 3.4bn. We expect SBILIFE's APE growth to be on par with the industry's. Individual savings APE declined 15% YoY to Rs. 21.1bn and comprise of 78% of the overall mix (Q2FY20: 88% Q1FY21: 75%). Although ULIP APE...

Persistency improved across cohorts, with the highest improvement seen in 61st month (by 340bp YoY to 60.9% in 1HFY21), which aided growth in the Renewal business. The company continues to maintain cost leadership, with the total expense ratio declining to 7.7% (~220bp YoY improvement). 2QFY21 shareholders' PAT grew 131% YoY to ~INR3.0b (in-line). Overall, we expect SBILIFE to deliver 17% VNB growth over FY2023E. We further expect VNB margins to improve to ~21% and operating RoEV to...

and revival in the ULIP business. It continues to focus on extracting more from its bancassurance and agency channels. Limited presence on the online platforms, however, is a dampener. The stock trades at FY22E P/EV of 2.1x, which we find...

Valuation and Outlook: We have valued the stock based on 3.2x forward P/EV and 36.3x forward P/VNB with a premium of 1.02x and has arrived at a price target of Rs. 988 with a potentialupside of 13%. We rate the stock as HOLD'.

SBI Life Insurance Company Limited, is a joint venture between SBI and BNP Paribas formed in 2001, which offers individual and group insurance plans, including traditional and unit linked plans. Its products cover life, health,...

SBI Life Insurance Company (SBIL) was established as a JV between State Bank of India and BNPPC, an insurance subsidiary of BNP Paribas. SBI Life has a big advantage due to its bancassurance with State Bank of India. Diversified product mix

SBI Life Insurance (SBIL)'s VNB margins improved by 80bps YoY to 18.7% during Q1FY21. Improvement was led by increasing share of group protection plans and savings products. Absolute VNB de-grew by ~29.7% in Q1FY21 on account of lockdown. However, renewable premium witnessed growth of ~29.5% YoY.

SBI Life's overall APE declined by 35% YoY as FYP de-grew by 34% YoY and despite 30% growth in single premium. Renewal premiums were also better growing 30% YoY, although 13M persistency (regular pay) saw weakness by110bps at 82.6% over FY20, while other buckets saw improved trends. Overall APE was slower on slower protection growth both on individual & group (lower loan attachments), while growth has been led in group savings showing lower reflection in APE growth. Margins at 18.7% were slightly lower than expectation dragged by not passing re-insurance rate hikes which it will...