Prabhudas Lilladher's research report on SBI Life Insurance Company
SBI Life ended the FY21 with 6.6% of APE growth which grew 48% YoY/13% QoQ on back of 24% growth in New business premium in FY21 & 62% YoY/14% QoQ in Q4FY21. Strong top line and mix also enhanced margins to be better than expectations at 20.4% in FY21 (PLe: 19.9%) and implying 22.2% exit margin in Q4FY21 (PLe:21.2%). This led to a strong 20% YoY growth in absolute VNB. Strong growth was seen in non-par savings, individual protection, group business and recovery in ULIPs happening quarter to quarter. Going ahead, with non-par (both saving & protection) still at 23-24% which is lower than peers will help growth & improve margins.
Outlook
SBILI’s is now only a notch lower on effective tax rate basis on margins with peers which it will cover with continued protection & non-par growth and less sensitivity on product through pricing. Risk reward continues to be favourable, maintain BUY with revised TP to Rs1,150 (from Rs1,080) on 2.5x FY23 EV.
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