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Buy SBI Life Insurance; target of Rs 1450: Motilal Oswal

Motilal Oswal is bullish on SBI Life Insurance recommended buy rating on the stock with a target price of Rs 1450 in its research report dated April 28, 2022.

April 30, 2022 / 12:37 PM IST

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

 
 
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Motilal Oswal's research report on SBI Life Insurance


SBILIFE reported a soft 4QFY22 with APE growth of 4% YoY and flattish VNB growth (missed our estimate by 2%). VNB margin improved 120bp QoQ to 26.8% while shareholders' PAT grew 26% YoY to INR6.7b. -APE growth was muted in 4QFY22 due to pressure in ULIP and par products. ULIP posted a 6% decline YoY after four quarters of strong double-digit growth. The decline was led by heightened volatility in capital markets due to geopolitical crisis and increase in interest rates. Par products dipped 31% YoY. -Persistency ratio improved across all cohorts with 120bp/110bp QoQ improvement in 13M/61M, respectively. On an ETR basis, EV grew 9% YoY to INR396b in FY22. Operating RoEV was at 20.6% for FY22 with an EVOP of INR69b. This is mainly because it included a positive impact of INR12.2b in operating experience and INR4.1b in VNB due to a change in computation method from ATR to ETR basis.



Outlook


We cut our growth projections marginally as we expect SBILIFE to deliver 22% CAGR in APE over FY22-24. VNB margin is estimated to improve 110bp over the same period to 27.0%, thus enabling 24% VNB CAGR, while RoEV sustains at ~20%. SBILIFE remains our preferred pick in the Life Insurance space. Maintain BUY with a TP of INR1,450.

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first published: Apr 30, 2022 12:37 pm
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