SBI Life Q2 Results Review - Annual Premium Equivalent, Value Of New Business Margins Inline: Motilal Oswal

Motilal Oswal Report

SBI Life Insurance Company Ltd. reported in-line performance in Q2 FY24. Annual premium equivalent grew 33% YoY (in line) while of new business rose 20% YoY. Margin contracted 310 bp YoY to 28.5% as product mix shifted towards unit linked insurance plans. Profit after tax was flat YoY at Rs 3.8 billion (versus our estimate of Rs 4.2 billion; 10% miss).

In terms of new business profit, the Group Savings posted a healthy growth of 70% YoY, while non-par savings declined 6% YoY in Q2 FY24.

Protection and ULIP segments reported a robust growth of 37% and 39% YoY, respectively.

We expect SBI Life to deliver a 20% compound annual growth rate in APE over FY23-25, thus enabling a 19% VNB CAGR. Return on embedded is likely to stay at ~21-22%.

We reiterate our 'Buy' rating with a target price of Rs 1,570 (based on 2.3 times March-25E EV).

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