Buy SBI Life Insurance; target of Rs 840: HDFC Securities

HDFC Securities' research report on SBI Life Insurance

SBI  Life’s  3QFY18  was  a  strong  quarter on both on growth and margins.Higher  Interest  rate,  product mix drove its 9MFY18 margin to 16% (FY17 – 15.4%).  APE growth was strong at 42.2% despite higher base of 3QFY17. New  Business  and  Renewal Business premium increased by 26.1% and 32% YoY respectively. Individual  Premium  reported  strong  growth of 37.6% while Group  business  declined  23.8%  due  to  less focus on fund business. The protection  business clocked growth of 33.7% driven by Group term business.

Outlook

We continue to  like  SBI  Life  due to strong distribution footprint of its parent SBI along with industry tailwinds from financialisation of savings. We maintain BUY with a TP of Rs 840 (FY20 EV+ 26x FY20E VNB). For all recommendations report, click here

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