HDFC Securities' research report on SBI Life Insurance
With business recovery underway (APE: +113.0% QoQ), along with increasing VNB (VNB: +114.5% QoQ), we believe SBILIFE is on track to deliver a respectable FY21E- (APE/VNB -8.9/-8.3% YoY). We, however, take a longerterm view on the business and appreciate the strong distribution footprint of its parent SBI (24k+ branches), improving protection share (1HFY21: 12.6%, +545bps YoY), and lowest operating cost ratios (1HFY21: 8.6%, -180bps YoY). We expect SBILIFE to deliver healthy FY21-23E VNB CAGR of 16.9% and RoEVs of ~13.6-15.6% over FY21-23E.
We retain our BUY rating on SBILIFE with a target price of Rs 1,040 (Sep-22E EV + 27.5 x Sep-22E VNB). The stock is currently trading at FY21/22E P/EV of 2.5/2.2x and P/VNB of 24.7/19.6x. Lower growth, renewals, and protection share are key risks.
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