ICICI Direct's research report on SBI Life Insurance
SBI Life Insurance reported a healthy set of numbers led by strong renewal premium and investment income. Higher actuarial liability and elevated claims were offset by steady opex, which led to reasonable PAT growth. Premium growth was strong at 27.2% YoY to Rs 12858 crore, led by higher traction in renewal (up 28% YoY) and single NBP (up 71% YoY). Growth in renewal premium continued to remain healthy at ~28.1% YoY to Rs 7150 crore. New business premium (NBP) growth was healthy at 27.4% YoY to Rs 5940 crore, led by strong accretion in protection & group premium. Among NBP, traction in individual business was muted at Rs 2680 crore vs. Rs 2850 crore in Q2FY20, primarily led by decline in premium in Ulip (down 3.5% YoY) and non-par products (down 7.5% YoY). However, protection business reported strong growth at Rs 620 crore in Q2FY21, up 26.5% YoY. Proportion of total protection NBP to total NBP was at ~10.4% in Q2FY21. Group savings products reported strong growth at Rs 2650 crore, up 100.8% YoY.
Increase in customer appetite towards protection products amid Covid bodes well for long term business growth and VNB margin. Competitive pricing, focus on protection business, excellent operating efficiency remain key drivers. We continue to prefer businesses with long term growth potential and lower balance sheet, we remain structurally positive on the stock. Hence, we maintain our BUY rating on the stock with an unchanged target price of Rs 1000/share, valuing the stock at ~2.9x FY22E EV (~Rs 34106 crore in FY22E).
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