Buy SBI Life Insurance Company; target of Rs 1901: KR Choksey

KR Choksey's research report on SBI Life Insurance Company

The Gross Written Premium (GWP) for Q3FY25 stood at INR 249,978 Mn, a growth of 11.3% YoY (+22.5% QoQ), primarily led by the renewal premium. GWP was 1.9% lower than our estimates. The Value of New Business Margin contracted by 46 bps YoY (+4 bps QoQ) in Q3FY25 to 26.9% (vs. our est. of 27.0%). The Value of the New Business (VNB) grew by 11.3% YoY (+29.0% QoQ) to INR 18,700 Mn. The Annualized Premium Equivalent (APE) was INR 69,400 Mn in Q3FY25, a jump of 13.2% YoY (+28.8% QoQ). APE was 1.4% higher than our estimates. PAT for Q3FY25 was INR 5,504 Mn, a growth of 71.2% YoY (+4.0% QoQ). The embedded value stood at INR 681.4 per share, while the solvency ratio was 2.04x as of December 31, 2024.

Outlook

We lower our EVPS by 2.1%/ 3.2% for FY26E/ FY27E EVPS, respectively. We roll over our valuation to FY27E EVPS, assigning a 1.9x P/EV multiple (earlier 2.2x based on FY26E EVPS) to arrive at our target price of INR 1,901 per share (unchanged). Accordingly, we retain our “BUY” rating on the shares.