SBI Life Insurance Company Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Premium growth continued to remain healthy at 26% YoY to | 4755 crore in Q1FY19, led by 15% YoY growth in new business and 35% YoY in renewals. Protection business (individual + group) witnessed robust traction of 107% YoY to | 210 crore forming ~10% of NBP. Individual NBP growth remained at ~8% YoY, owing to base effect AUM growth was healthy at 18.8% YoY to | 120280 crore Opex grew 22% YoY to | 655 crore. Higher topline growth led to ~50...

Premium growth continued to remain healthy at 21% YoY to | 25350 crore in FY18 (| 9237 crore in Q4FY18), led by 30% YoY growth in individual new business and 31% YoY in renewals. Protection...

We maintain BUY with a TP of Rs 810 (FY20 EV+ 25x FY20E VNB). While SBI Lifes Total APE for FY18 grew 26.9% YoY, 4QFY18 Total APE growth was muted at 6.3% YoY largely due to the high base in 4QFY17. VNB Margins for the year expanded 80bps to 16.2% for FY18. Margin increase was despite a negative experience in mortality, and was driven by better product mix, positive experience in persistency, and lower acquisition costs.

Q3 was strong on robust 38.2% YoY growth in Individual Rated Premium (IRP; market share further up to 13% vs. 11.2% in FY17), improvement in persistency ratio (in majority of buckets), gradual uptick in Value of New Business margin (VNB margin; up 40 bps QoQ to 16%)

Net premium growth continued at a healthy pace of 29.2% YoY to | 6776 crore, led by 37.6% YoY growth in individual new business premium (NBP) and 31.6% YoY in renewals. Individual business NBP APE at 42.9% YoY led by unit linked business Healthy AUM growth at 23% YoY to | 111630 crore and better yields led to higher than estimated income from investment at | 2794 crore Opex grew 18.4% YoY to | 752 crore. Higher topline growth led to improvement in opex ratio to 11.03% vs 12.07% in Q3FY17...

We maintain BUY with a TP of Rs 840 (FY20 EV+ 26x FY20E VNB). SBI Lifes 3QFY18 was a strong quarter on both on growth and margins. Higher Interest rate, product mix drove its 9MFY18 margin to 16% (FY17 15.4%). APE growth was strong at 42.2% despite higher base of 3QFY17.

SBI Life Insurance: Unparalleled distribution network, leadership in New Business Premium (NBP) among private insurers; Interglobe Aviation: Best placed to capitalize on domestic passenger traffic growth, Endurnace technologies: ETL is the best way to play 2-Wheelers in India.

In a sweet spot for growth: Insurance penetration, density and protection gap indicates India is still significantly under insured; Under insured market = room for growth (~23% NBP CAGR over FY17-FY20E)

SBI Life with its unparalleled distribution network, leadership in new business premium (NBP) among private insurers, strong management team and top quartile service ratios is a proxy play to the huge opportunity in India's life insurance space.

SBI Life Insurance Company (SBI Life) was established as a JV between State Bank of India and BNPPC, an insurance subsidiary of BNP Paribas. With robust growth of 35.45% CAGR in FY15-17, SBI Life was the largest private insurer in terms of NBP gaining private market share at 20.04%. SBI Life has a big advantage due to its bancassurance with SBI, with a network of ~24000 branches. A diversified product mix and strong distribution capabilities will pave the way for faster growth, market share ahead. While focus on linked business is seen driving healthy growth in...