SBI Life Q1 Review - Gross Premium Inline; Value Of New Business Margin Contracts To 26.8%: Motilal Oswal

Motilal Oswal Report

SBI Life Insurance Company Ltd. reported a decent performance in Q1 FY25. Annual premium equivalent grew 20% YoY (in line) to Rs 36.4 billion, whereas absolute value of new business grew 11.5% YoY (a marginal miss of 2.4%) to Rs 9.7 billion during the quarter.

Strong growth in unit linked insurance plans and a blip in protection sales led to a contraction in VNB margin for Q1 FY25. VNB margin came in at 26.8% versus 28.8% in Q1 FY24 (our estimate at 27.5%).

We expect SBI Life to deliver an 18% CAGR in APE and VNB over FY24-26, while return on embeddednvalue is likely to remain ~20%.

We reiterate our Buy rating on the stock with a target price of Rs 1,900 (premised on 2.2 times March-26E EV).

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