ICICI Direct has given Buy recommendation for SBI Life Insurance with a target price of Rs. 1100 in its research report issued on May 04, 2021

ICICI Direct’s research report on SBI Life Insurance

SBI Life Insurance reported strong growth on the premium front while controlled cost ratios, sequential decline in actuarial liabilities aided the company to have a healthy surplus and PAT. Premium growth remained healthy at 31% YoY, 13% QoQ to Rs 15556 crore, led by higher traction in first year premium (up 45% YoY) and single premium (up 97% YoY). Growth in renewal premium continued to remain healthy at ~16% YoY to Rs 9459 crore. New business premium (NBP) also witnessed a sequential pick-up in growth as it was up 13.8% QoQ, 62% YoY to Rs 6189 crore, led by traction in individual business at Rs 2930. Protection business (individual + group) continued to report strong growth at Rs 840 crore vs. Rs 710 crore QoQ; proportion of total protection NBP to total NBP was at ~13.6% in Q4FY21 vs. 13.1% in previous quarter. As a result of increased quantum of protection and non-par business, VNB margins improved from 19.3% to 20.4%.

Outlook

We upgrade our target price to Rs 1100/share (earlier Rs 1000), valuing the stock at ~2.7x FY23E EV. We maintain our BUY recommendation.