Buy SBI Life Insurance; target of Rs 1600: Motilal Oswal

Motilal Oswal's research report on SBI Life Insurance

SBILIFE has delivered a robust NBP growth of 26% in FY23YTD, outperforming the leading private players. We estimate SBILIFE to deliver an APE CAGR of 26% over FY22-24, the highest in our LI coverage universe. The company’s premium mix has improved with the share of annuity and protection in total NBP increasing 900bp over the last three years, while the mix of ULIP/PAR has reduced. We estimate the product mix to improve further, thus keeping margins resilient. A strong agency channel in bancassurance provides SBILIFE a distinct competitive advantage in the distribution of its insurance products. Improving productivity of both these channels reinforces our faith in the long-term growth prospects of the company. -We estimate VNB to register a CAGR of 38% over FY22-24, while margins to expand to 31.4%. We expect VNB contribution to Operating RoEV to improve to 15% in FY24 from 9% in FY20, thus driving RoEV to 22% in FY24E.

Outlook

SBILIFE is among our preferred picks in the life insurance space and we reiterate our BUY rating on the stock with a TP of INR1,600 (2.5x Sep’24E EV).

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