Target: ₹2,400
CMP: ₹1,951.10
SBI Life Insurance has been a consistent compounder with FY20-25 APE CAGR at 15 per cent vs. 6 per cent for the industry, supported by an extensive SBI branch network and one of the largest agent bases in the private life insurance industry. We expect the growth trajectory to remain stable at about 15 per cent for FY26-28 as well.
The company is gradually shifting its mix toward higher-margin traditional products, aiming to reduce ULIP share in individual APE from about 67 per cent currently to about 60 per cent. The company is targeting to increase the share of Protection to 9-9.5 per cent of individual APE. The management expects the APE growth trajectory to further improve from about 15 per cent, as the product mix shifts towards traditional products.
The gradual shift toward higher-margin products, robust operational efficiency and rising rider attachments is expected to help maintain VNB margin at 26-28 per cent, despite temporary headwinds from the loss of input tax credit.
The potential implementation of commission caps is expected to cause low impact for SBI Life, given its commission ratio (about 4.8 per cent in 9MFY26) is significantly better than the industry average.
The combination of sustained APE growth, stable VNB margins and disciplined cost management positions SBI Life to achieve about 18 per cent operating RoEV, going forward. We reiterate our Buy rating with a TP of ₹2,400 (based on 2.1x FY28E P/EV).