KR Choksey has given Buy recommendation for SBI Life Insurance with a target price of Rs. 1550 in its research report issued on Oct 27, 2022
KR Choksey’s research report on SBI Life Insurance
Gross Written Premium (GWP) grew by 12.9% YoY/ 46.5% QoQ to INR 1,66,211 Mn in Q2FY23, mainly driven 17.3% YoY/ 58.5% QoQ growth in renewal premium. Value of New Business (VNB) grew by 24.0% YoY/ 40.9% QoQ to INR 12.4 Bn in Q2FY23 with margins at 31.6%. The VNB margins expanded by 643 bps YoY/ 121 bps QoQ. Profit after Tax (PAT) was at INR 3,767 Mn in Q2FY23, a growth of 52.8% YoY/ 43.3% QoQ. The solvency ratio as of September 30, 2022, stood at 2.19x (improvement of 700 bps YoY) as against the regulatory requirement of 1.50x. The company’s net worth increased by 11.9% from INR 122.1 Bn.
We continue to apply a 2.7x P/EV on FY24E EVPS of INR 574.3 and a VNB multiple of 15x to arrive at a weighted average TP of INR 1,550 per share (unchanged) for SBI Life (50:50 weights on the P-EV and appraisal value methodology); implying a potential upside of 23.5% from the CMP. Accordingly, we maintain our rating as “BUY” on the shares of SBILIFE.