Buy SBI Life Insurance; target of Rs 1570: Motilal Oswal

Motilal Oswal's research report on SBI Life Insurance

SBILIFE reported a slightly muted performance in 1QFY24. APE grew 4% YoY (in line), while VNB was flat YoY as margins contracted 290bp QoQ to 28.7%, due to product mix shifting towards ULIPs. PAT grew 45% YoY to INR3.8b (27% beat). In terms of NBP, annuity saw a healthy growth of 102% YoY, while Non-Par savings declined 28% YoY in 1QFY24. Protection/ULIP segment saw modest growth of 11%/10% YoY.

Outlook

We slightly lower our VNB margin estimates and expect VNB margins to remain at 29.7% in FY25. We expect SBILIFE to deliver a 20% CAGR in APE over FY23-25, thus enabling a 17% VNB CAGR. RoEV is expected to stay at around ~22%. We reiterate our Buy rating on the stock.