Buy SBI Life Insurance Company; target of Rs 1985: KR Choksey

KR Choksey's research report on SBI Life Insurance Company

The Gross Written Premium (GWP) for Q1FY25 stood at INR 155,721 Mn, a growth of 14.9% (-38.3% QoQ), primarily led by a 16.2% YoY growth in the renewal premium. GWP was in line with our estimates. The Annualized Equivalent Premium (APE) was INR 36,400 Mn in Q1FY25, a jump of 20.1% YoY (-31.7% QoQ) led by higher growth in the first-year premium segment. APE was 2.5% higher than our estimates. The Value of the New Business (VNB) grew by 11.5% YoY (-35.8% QoQ) to INR 9,700 Mn. VNB was 2.4% lower than our estimates. As of June 30, 2024, AUM stood at INR 4,147.7 Bn, a growth of 26.3% YoY (+6.6% QoQ). We have tweaked our FY25E VNB margins slightly from 28.5% to 28.0%.

Outlook

We raise our target price to INR 1,985 per share (earlier INR 1,705), assigning a multiple of 2.3x (earlier 2.2x) for its FY26E embedded value. This is based on our expectation of strong APE growth and continued cost leadership. Accordingly, we maintain our “BUY” rating.

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