Buy SBI Life Insurance; target of Rs 2100: Motilal Oswal

Motilal Oswal's research report on SBI Life Insurance

SBI Life Insurance (SBILIFE) reported a weak performance in 2QFY25. APE grew 3% YoY to INR53.9b (11% miss). For 1HFY25, it grew 9% YoY to INR90.3b. Absolute VNB declined 3% YoY to INR14.5b (14% miss). For 1HFY25, it grew 3% YoY to INR24.2b. The management expects VNB growth to remain in the range 12-15% in FY25. VNB margins came in at 26.9% vs. 28.5% in 2QFY24 and 26.8% in 1QFY25 (est. 28%). However, the management expects margins to remain in the range of 26-27% in FY25 on the back of new product launches in the protection segment and a minimal impact of surrender charges. In 2QFY25, shareholder PAT grew 39% YoY to INR5.3b (in line). For 1HFY25, it grew 38% YoY to INR10.5b. We expect SBILIFE to deliver an 18% CAGR each in APE and VNB over FY24-27E, while RoEV is likely to remain at ~20% over FY27. Due to strong growth in ULIPs and a blip in protection sales, we have cut our APE/VNB estimates for FY25. We reiterate our BUY rating on the stock with a TP of INR2,100 (premised on 2.3x Sept’26E EV).

Outlook

We expect SBILIFE to deliver an 18% CAGR each in APE/VNB over FY24-27E, while RoEV is projected to remain ~20% over FY27. We reiterate our BUY rating on the stock with a TP of INR2,100 (premised on 2.3x Sept’26E EV).