Post the strong performance of Retail new business during Jul-Aug 2023, SBILIFE shares have not moved much, given investor concerns on such growth being a factor of ULIP-led growth and that, hence, margins are likely to come under pressure. However, our channel checks and discussions with the company suggest that these concerns are unfounded and that Company is well on track to deliver ~20% Retail APE growth in FY24 with VNB margin upholding at ~29%. Overall, SBILIFE’s franchise strength powered by brands and distribution remains intact, thus giving it an edge in terms of ability to distribute a variety of life insurance products.
OutlookAgainst this backdrop, we increase FY24- 26E APE and VNB by ~2-3% each, and reiterate our BUY rating on the stock with Sep-24E target price of Rs1,690/share (FY25E P/EV: 2.6x).
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