Target: ₹2,500

CMP: ₹1,499.55

SBI Life Insurance’s Q3-FY25 VNB (value of new business) growth was at 11 per cent y-o-y and 29 per cent q-o-q, whereas VNB margin (YTD-FY25) was broadly stable at 26.9 per cent (up10bps q-q) and in line with the FY25 margin guidance of 26-27 per cent. This margin performance was despite a sequential increase in the mix weight of ULIP products (71 per cent), which are lower margin than other segments.

Q3-FY25 annual premium equivalent (APE) growth was 13 per cent y-o-y and 29 per cent q-o-q. The company guided for 15-17 per cent sustainable medium term APE growth with margins of 27-29 per cent. For FY25, management remains confident of 14-15 per cent individual APE and 10 per cent+ overall APE growth (YTD APE growth stands at 11 per cent y-o-y).

ULIP sales (APE) witnessed robust growth of 18 per cent y-o-y/41 per cent q-o-q. The company was unequivocal in its clear focus on the agency channel which they expect to grow at a much faster rate than banca over the next few years, in line with the pattern seen this year (36 per cent y-o-y growth in agency NBP).

Valuations at 1.9x FY26E P/EV remain attractive in the light of 19 per cent RoEV expectation over FY25-27E, in both absolute and sector relative terms. SBI Life remains our clear top pick within the life insurance sector.

Published on January 20, 2025