Buy SBI Life Insurance; target of Rs 1630: KR Choksey

KR Choksey's research report on SBI Life Insurance

Gross Written Premium (GWP) grew by 19.4% YoY to INR 1,35,551 Mn in Q1FY24, mainly driven by 27.6% YoY growth in renewal premium. The sequential fall in GWP was 32.3% QoQ. Value of New Business (VNB) declined by 1.1% YoY/ 39.6% QoQ to INR 8,700 Mn in Q1FY24 with margins at 28.8%. Profit after Tax (PAT) stood at INR 3,810 Mn in Q1FY24, a growth of 19.4% YoY (vs -51.0% QoQ). The solvency ratio as of June 30, 2023, stood at 2.15x (a de-growth of 600 bps QoQ). AUM grew by 25.1% YoY/ 6.8% QoQ to INR 3,282.8 Bn as of June 30, 2023.

Outlook

We continue to apply a 2.5x P/EV on FY25E EVPS of INR 652.1 and a VNB multiple of 15.2x to arrive at a weighted average TP of INR 1,630 per share (unchanged) for SBI Life (50:50 weights on the P-EV and appraisal value methodology); implying a potential upside of 27.3% from the CMP. Accordingly, we maintain our rating as "BUY" on the shares of SBILIFE.

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