KR Choksey's research report on SBI Life Insurance
Gross Written Premium (GWP) grew by 6.5% YoY/ 16.3% QoQ to INR 1,93,319 Mn in Q3FY23, mainly driven 6.5% YoY/ 16.3% QoQ growth in renewal premium. Value of New Business (VNB) grew by 31.3% YoY/ 21.8% QoQ to INR 15.1 Bn in Q3FY23 with margins at 27.8%. The VNB margins expanded by 264 bps YoY on account of better product mix but declined by 374 bps QoQ. Profit after Tax (PAT) stood at INR 3,014 Mn in Q3FY23, a de-growth of 17.2% YoY/ 20.0% QoQ. The solvency ratio as of December 31, 2022, stood at 2.25x as against the regulatory requirement of 1.50x.
We continue to apply a 2.5x P/EV on FY25E EVPS of INR 699.9 and a VNB multiple of 12.8x to arrive at a weighted average TP of INR 1,750 per share (earlier INR 1,550) for SBI Life (50:50 weights on the P-EV and appraisal value methodology); implying a potential upside of 37.5% from the CMP. Accordingly, we maintain our rating as "BUY" on the shares of SBILIFE.
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