SBI Life Insurance Company Ltd. share price target

medical services whereas normal business growth was led by protection (marketing the increase in rates was one factor) and push from online channel sales. We believe, May & Jun should trend with similar de-growth numbers and will pick up only in 2HFY21....

SBI Life reported a largely stable fourth quarter with PAT growth of 16% YoY to Rs 5.3bn on moderation in change in valuation of policy liabilities. APE declined by 13% YoY on ULIP sale decline of 15%.

Premium accretion witnessed moderation amid the Covid-19 lockdown at the end of the quarter. Despite moderation in premium, focus on investments (net MTM loss of ~| 75 crore for shareholders) and higher shareholders surplus enabled better profitability. Opex growth witnessed a dip at 7.9% YoY to | 1180 crore with opex ratio steady at 9.9%. Moderation in new business premium & investment loss led to a decline in topline, offset by a decline in actuarial liability resulting in healthy policyholder surplus at | 659 crore. Such high surplus led to betterthan-expected earnings at | 531 crore; up 16% YoY. Volatility in market led...

Protection Guaranteed and Annuity Protection is Paving Way to Protection Segment Rise: Value of new business APE has increased

Yet another strong quarter for insurance giant 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 (SBILIFE) among private life insurers possesses by far the largest bancassurance network, bancassurance network size being most critical for scalability. Its individual agency force is highly productive among key private sector life insurer peers leading to cost efficiencies.

AUM growth remained healthy at 22% YoY to | 164190 crore. Income from investment surged at | 4073 crore in Q3FY20, leading to higher trajectory in topline. Operating expenses (commission and opex related to insurance business) grew 23.8% YoY in Q3FY20 to | 1097 crore. Led by robust...

Given the strong distribution footprint of its parent SBI (24k+ branches), improving protection share (9MFY20: 8.0%, +174bps YoY), lowest operating cost ratios (9.1%), and improving margins (VNBM: 20.5%) we expect SBILIFE to deliver strong FY19-22E VNB CAGR of 23.3% p.a. and RoEVs of ~18-18.5%. Lower than expected growth and protection share remain a key risk to our call. SBILIFEs 3QFY20 performance was a mixed bag, as NBP/APE growth was strong at 26.8/16.3% YoY; however decline in protection/NPAR share to 6.8/5.7% (-27/-573bps QoQ) was disappointing. Strong 9MFY20 adj. VNBM at 20.5% (+30bps vs. 1HFY20) compensated. SBILIFE is our top BUY with a TP of Rs 1,230 (Dec-20 EV + 25.4x Mar-22E VNB).

Broking While competitive intensity remains intense, the quarter witnessed default by Karvy stock broking resulting in SEBI action of debarring the broker to add clients and restricting client trades. This has resulted in risk aversion with retail investors fleeing Karvy for other larger retail brokers. We expect this trend to continue for 1-2 quarters and be beneficial for bank owned brokers. Life insurance and mutual funds Pvt. life insurers continued to grow in 3QFY20, with individual NBP/APE growth of 18.8/16.3% in 3QFY20. On the other hand, equity (ex arbitrage and ETF) flows for 3QFY20 were muted at Rs 26bn (-90.8% YoY).

Retain BUY with an increased TP of Rs 1,230 (+23.4%) implying a DCF derived Dec-20E EV + 25.4x FY22E VNB. SBILIFE continues to be our top pick in the life insurance space. Retain BUY with an increased TP of Rs 1,230 (+23.4%) implying a DCF derived Dec-20E EV + 25.4x FY22E VNB. SBILIFE continues to be our top pick in the life insurance space. Our recent interaction with SBILIFE convinced us that growth surprises will persist. Increasing width (and depth) at activating SBIs branch network and SBILIFEs new partner addition initiatives drive our conviction. Further, a higher than expected APE growth in 8MFY20, leads us to upgrade FY20E-22E APE by 3.4-7.2%.