Buy SBI Life Insurance; target of Rs 800: ICICI Direct

ICICI Direct's research report on SBI Life Insurance

SBI Life reported healthy growth in premium at 22.5% YoY to Rs 11380 crore, led by robust traction in renewals (27.7% YoY) and healthy growth in new business premium (NBP). Traction in both - individual (16% YoY) and group NBP (12% YoY) remained healthy. Focus on protection business has led to a rise in its proportion to ~12% in FY19 vs. ~6% in FY18. AUM growth remained healthy at 21% YoY to Rs 141020 crore.

Outlook

Strong distribution network, cost control & focus on high margin protection business and rising persistency are expected to result in healthy operating RoEV at ~18% in FY20-21E. Rolling our valuation to FY21E, we revise our target price to Rs 800, valuing the stock at 2.6x FY21 EV.