Buy SBI Life Insurance; target of Rs 1500: Motilal Oswal

Motilal Oswal's research report on SBI Life Insurance

SBILIFE reported a strong 2QFY22, with APE growth of 46% YoY (5% beat) and VNB growth at a stellar 91% YoY (10% beat). VNB margin improved to 25.9% (up ~560bp YoY). However, shareholders’ PAT declined by ~18% YoY on account of higher claims settled in 2QFY22. Among segments, ULIP saw a strong rebound, up 67% YoY. NonPAR/Protection grew better than its peers, up 68%/21% YoY. Persistency has improved across cohorts, with 13th month persistency improving by ~180bp YoY to 87.7% and steady trends in the 61st month at 60.7%. We estimate 23% CAGR in APE over FY21-24E. VNB margin is estimated to reach 26.2% by FY24E, thus enabling 28% VNB CAGR and ~18% EV CAGR over FY21-24E. We maintain our Buy rating.

Outlook

We maintain our Buy rating with a revised TP of INR1,500/share (2.7x Sep’23E EV).