Buy SBI Life Insurance; target of Rs 1050: Emkay Global Financial
Emkay Global Financial is bullish on SBI Life Insurance has recommended buy rating on the stock with a target price of Rs 1050 in its research report dated January 22, 2021.
January 25, 2021 / 05:00 PM IST
Emkay Global Financial's report on SBI Life Insurance
SBIL reported Value of New Business (VNB) growth of ~12.9% yoy to Rs7bn with further improvement in VNB Margins. AUM crossed Rs2tn with private market leadership in NBP at ~23.7% market share. Renewal Premium grew 27% with 13M persistency at 86.2%. VNB margins improved by ~170bps yoy (+120bps qoq) to ~20% in Q3FY20, better than our and Street expectations. With a gradual decline in ULIPs, the overall margin profile should witness steady growth, aided by a rise in single premium policies. Management remains firm about the rising share of Protection plans through increasing focus on credit protection. However, like IPRU, SBIL also depends heavily on bancasurance (~64% of distribution by SBI), which could trigger steady growth for ULIPs in H2FY20 due to stabilizing trends in the equity market.
We retain our estimates with VNB margin improving to ~23% by FY23E and 20.4% CAGR in absolute VNB to Rs35bn. Maintain Buy/OW stance in Insurance EAP, with a TP of Rs1,050 (Rs1,006 earlier), corresponding to 2.5x P/Mar’23 EV. We continue to like the stock based on improving profitability and attractive risk-reward.
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