SBI Life Insurance Target: ₹2,500, CMP: ₹1,499.55
SBI Life Insurance reported a strong performance in Q3-FY25, with VNB growth at 11% y-o-y and 29% q-o-q. The VNB margin was stable at 26.9% (up 10bps q-q), in line with the FY25 guidance of 26-27%. This performance was achieved despite an increase in the mix weight of ULIP products, which have lower margins.
Q3-FY25 APE growth was 13% y-o-y and 29% q-o-q. The company expects sustainable medium-term APE growth of 15-17% with margins of 27-29%. For FY25, management projects 14-15% individual APE growth and 10%+ overall APE growth.
ULIP sales witnessed strong growth, up 18% y-o-y and 41% q-o-q. The company is focused on accelerating growth in the agency channel, which is expected to outpace banca in the coming years.
With valuations at 1.9x FY26E P/EV, SBI Life Insurance remains an attractive investment with an expected RoEV of 19% over FY25-27E. It is our top pick in the life insurance sector.
Published on January 20, 2025.
