SBI Life’s VNB decline of 1% YoY in Q1FY24 was driven by lower APE growth (4% YoY) and 153bps decline in VNB margin (Q1FY24 margin stood at 27.8%). The muted show is attributable to a combination of base effect and relative change in product mix, as per the management. While the management has maintained a volume growth/margin guidance of 20%/28-30%, we remain structurally positive on its distribution strength (parent bank APE grew 7% YoY in Q1FY24 to INR 19.8bn) of the company and the overall brand franchise. This should help generate 11%/15% VNB growth and 19.6/19.2% ROEV in FY24E/25E, respectively. Maintain BUY.
OutlookMaintain BUY with an unchanged target price of INR 1,650 based on 2.5x (unchanged) FY25E EV We factor VNB margin of 29% in FY24/25E. Our APE growth assumption of 15% remains unchanged in FY24E/FY25E. This results in an EV of INR 657bn with RoEV of 19.2% in FY25E.
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