BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
HDFC Securities Report
Over SBI Life Insurance Company’s FY21E we expect Covid-19 and changes in personal taxation to cause significant disruption to insurance sales (FY21E annual premium equivalent (APE) -13.1% YoY). We however take a longer term view on the business and appreciate the strong distribution footprint of its parent State Bank of India (over 24,000 branches), improving protection share (Q1 FY21: 12.6%, over 137 basis points YoY), lowest operating cost ratios (Q1 FY21: 10.1%).
We expect SBI Life to deliver healthy FY20-23E of new business (VNB) compound annual growth rate (CAGR) of 6.6% and return on embedded (RoEV)s of approximately 13.4-15.4% over FY21-23E. We retain our Buy rating on SBI Life with an unchanged target price of Rs 975 (March 21E EV+ 28.9 times March-22E VNB). The stock is currently trading at FY21/22E P/EV of 2.8/2.5 times and P/VNB of 31.2/25.1 times. Lower growth, renewals, and protection share are key risks.
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