Buy SBI Life Insurance; target of Rs 735: HDFC Securities

HDFC Securities' research report on SBI Life Insurance

Driven by protection business (NBP Rs 3.7bn, +164.2% YoY), SBI Life’s 2QFY19 total NBP grew 39.8% YoY to Rs 34.8bn. APE growth was lower at 14.2% YoY to Rs 23.9bn given change in structure of credit protect product from (regular to single premium). Protection business growth was stellar in both individual and group segments- 256/127% YoY respectively and its share on APE basis improved to 5.9% vs. 4.5% in 1QFY19. Consequently, co reported VNB margin expansion of 20bps for 1HFY19 to 19.2%.

Outlook

We continue to like SBI Life due to the strong distribution footprint of its parent SBI, lowest operating cost ratios in the industry, and tailwinds from financialisation of savings. Maintain BUY with a TP of Rs 735 (Avg FY20-21E EV + 20.8x avg FY20-21E VNB).