Buy SBI Life; target of Rs 1750: Emkay Global Financial

Emkay Global Financial's research report on SBI Life

SBI Life reported a broadly in-line 9MFY24 performance , with APE coming ~2% above our estimates, while VNB margin logging at 28.1%, lower by ~0.4ppts, leading to 9M VNB of Rs40.4bn (in line with our estimate). Overall, the 9M VNB margin of 28.1% and VNB growth of 11% YoY are best-in-class among peers and are a testimony to Company’s strength in brand and distribution, coupled with its cost leadership. Despite the increase in share of ULIPs in the APE products mix (+4.7ppts YoY in 9M), the company contained the VNB margin compression to 1.5ppts. Management expects SBI Life to clock robust growth in the medium term, growing above the industry rate, and VNB margins to track at around 28% for FY24, depending on the product mix. Baking-in the Q3FY24 developments, we tweak our FY24-26 estimates which results in a ~1% cut in VNB.

Outlook

We reiterate our BUY rating on the stock, with unchanged Dec-24E TP of Rs1,750/share (implying a FY25 P/EV of 2.7x).