Buy SBI Life Insurance; target of Rs 2400: Motilal Oswal

Buy

Motilal Oswal's research report on SBI Life Insurance

SBI Life Insurance (SBILIFE) has been a consistent compounder with FY20-25 APE CAGR at 15% vs. 6% for the industry (15% YoY in YTDFY26 vs 13% for the industry), supported by an extensive SBI branch network and one of the largest agent bases in the private life insurance industry. We expect the growth trajectory to remain stable at ~15% for FY26-28 as well. The company is gradually shifting its mix toward higher-margin traditional products, aiming to reduce ULIP share in individual APE from ~67% currently to ~60%. Protection is growing significantly faster than the overall business, and the company is targeting to increase the share to 9.0-9.5% of individual APE. Management expects the APE growth trajectory to further improve from ~15% as the product mix shifts towards traditional products. The gradual shift toward higher-margin products, robust operational efficiency, and rising rider attachments is expected to help in maintaining VNB margin in the range of 26-28%, despite temporary headwinds from the loss of input tax credit. We expect the VNB margin to improve by 50bp YoY each in FY27/28, reaching 28.5% in FY28.

Outlook

The combination of sustained APE growth, stable VNB margins, and disciplined cost management positions SBILIFE to achieve ~18% operating RoEV going forward. We reiterate our BUY rating with a TP of INR2,400 (based on 2.1x FY28E P/EV).

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SBI Life Insurance - 1803026 - icici