SBILIFE reported strong protection trends in both Retail and Group Protection, while the trend in ULIP remained tepid. 1HFY21 VNB margins remained broadly stable at 18.8% (vs 18.7% in 1QFY21), supported by an improving business mix. Persistency improved across cohorts, with the highest improvement seen in 61st month (by 340bp YoY to 60.9% in 1HFY21), which aided growth in the Renewal business. The company continues to maintain cost leadership, with the total expense ratio declining to 7.7% (~220bp YoY improvement). 2QFY21 shareholders’ PAT grew 131% YoY to ~INR3.0b (in-line). Overall, we expect SBILIFE to deliver 17% VNB growth over FY20–23E. We further expect VNB margins to improve to ~21% and operating RoEV to sustain at ~18% by FY23E. Maintain BUY.
OutlookThus, we expect operating ROEV to sustain at ~18% by FY23E. Maintain Buy, with TP unchanged at INR1,000 (2.6x Sep’22E EV).
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