SBI Life's total annual premium equivalent for Q2 FY26 was up by 10.4% YoY and 49.9% QoQ to Rs 59.5 billion. Upto August, the Agency and Banca channel growth was not upto the mark but then some norms were tweaked, which resulted in a very positive environment in in September.
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Yes Securities Report
We maintain ‘Buy’ rating on SBI Life Insurance Company Ltd. with a revised price target of Rs 2220.
Margin expanded QoQ, while management expects product mix change to offset the negative impact of GST cut:
Calculated VNB margin for Q2 FY26 up 44 bps QoQ and 100 bps YoY to 27.9%, driven by better product mix. For the business sold after September 22, the impact is about 20 bps and since this business had 11.5% share, the annualised impact is 174 bps (70-80 bps for H1).
The share of protection is on the rise and rider attachment is also going to be healthy for ULIPs. In H2, management expects product mix change to more than absorb the impact on margin due to GST. Hence, H2 will have a similar margin as H1 or decline by 20-30 bps at most. ULIP margin will improve going forward due to longer term products and better rider attachment.
The company keeps monitoring interest rates and repricing Non-Par products in order to keep margin at the same level. In order to mitigate GST cut, so far, the company has not considered any changes to distributor commission.
The company will explore other levers in terms of operational efficiency and product changes.
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Also Read: 'Buy' SBI Cards Shares Maintains Axis Securities Post Q2 Results, Hikes Target Price — Here's Why
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