Buy SBI Life Insurance Company; target of Rs 1127: Prabhudas Lilladher

Prabhudas Lilladher's research report on SBI Life Insurance Company

SBI Life's NBP continued to grow strong at 35% YoY in 9M20 with APE growth of 22% on very strong growth from Non-PAR. Protection business growth moderated to 36% YoY as individual protection de-grew 8% sequentially as an aberration on push to higher ticket size products, though the management maintains the core focus remains to ramp up protection. Margins continued to improve with 80bps YoY ending at 18.3% on back of mix change. Higher operating variance to the extent of Rs 0.86bn have come from provisioning for higher employee acquisition expenses towards 4-5 new banca partnerships.

Outlook

Overall operating metrics like persistency, margins, cost have been improving while growth has remained steady which will continue to do so ahead. We retain BUY with revised TP of Rs1,127 (from Rs991) based on 3.2x (from 2.9x) Sep-21 P/EV.