Buy SBI Life Insurance Company; target of Rs 1750: ICICI Securities

ICICI Securities research report on SBI Life Insurance Company

SBI Life Insurance (SBLI) maintains its sectoral outperformance basis volume growth (17% YoY in 9MFY24) as well as margins (28.1% in 9MFY24), resulting in higher EVoP (~20% for five years ending FY24 likely). Its distribution capacity (both in bancassurance as well as other channels) is allowing for better access in beyond-tier-1 locations, leading to volume outperformance. Basis management guidance as well as product pipeline, the company is likely to show better margin resilience around 28% levels despite EOM regulations. Maintain BUY. Key risks include regulatory changes such as smaller tax exemptions on insurance and/or higher surrender value for non-linked savings.

Outlook

We factor in VNB margins of 28% in FY25/26E and model 15% APE growth in FY25E/FY26E. This results in an EV of INR 796bn with RoEV of 18.5% in FY26E. We roll forward our estimates to FY26 and lower the multiple from 2.5x to 2.2x to accommodate any regulatory changes, including a possible increase in surrender value.