Buy SBI Life Insurance Company; target of Rs 1795: ICICI Securities

ICICI Securities's research report on SBI Life Insurance Company

SBI Life Insurance (SBLI) maintains its sectoral outperformance in FY24 basis volume growth (17%), VNB growth (9%), core RoEV (21.8%) as well as overall RoEV (26%). The company also reported INR 6.1bn of positive operating variance in FY24. The company has now delivered core RoeV of ~20% or more for the last five years. Its distribution capacity (both in bancassurance as well as other channels) is allowing better access in beyond tier-1 locations, leading to volume outperformance. Customer penetration within SBI network remains in low single digits. Basis management guidance, product pipeline and lower opex, the company can show better margins in FY25. Maintain BUY. Key risks include any adverse change in distribution and cost equations under open architecture regime.

Outlook

We factor in VNB margin of 28% in FY25/26E and model 15% APE growth in FY25/26E. This results in an EV of INR 816bn with core RoEV of 18.6% in FY26E. We value the stock based on 2.2x FY26E EV per share to arrive at our TP of INR 1,795 (from INR 1,750).