Buy SBI Life Insurance Company; target of Rs 1705: KR Choksey

KR Choksey's research report on SBI Life Insurance Company

The Gross Written Premium (GWP) for Q4FY24 stood at INR 252,411 Mn, a growth of 26.1%/ 12.4% QoQ, primarily led by surge in the New Business Premium (NBP). GWP was 5.5% higher than our estimates because a single premium segment performed better than expected. The Annualized Equivalent Premium (APE) was INR 53,300 Mn in Q4FY24, a jump of 17.1% YoY but declined by 13.1% QoQ on account of a sharp decline in the first-year premium segment. APE was 1.1% higher than our estimates. The Value of the New Business (VNB) declined by 10.1% QoQ but grew by 4.9% YoY to INR 15,100 Mn. VNB was 4.5% higher than our estimates due to higher-than-estimated margins. We have tweaked our FY26E VNB margins slightly from 29.2% to 28.5%.

Outlook

We maintain our target price at INR 1,705 per share for SBILIFE assigning a multiple of 2.2x for its FY26E embedded value.