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Nirmal Bang Report
SBI Life Insurance Company Ltd.'s Q4 FY24 annual premium equivalent grew by 16.6% YoY, driven by strong growth in unit linked insurance plan and Group Protection business (64% of Q4 APE).
We expect overall APE growth momentum to be strong in FY25, with non participating/retail protection portfolio contributing to growth as well, factoring in ~17% growth in FY25 (similar to FY24 run-rate).
Value of new business margin improved to 28.3% in Q4 (versus 27.4% in Q3 FY24) as the share of protection increased in the mix. We expect VNB margins to improve to ~28.4% in FY25 as the company focuses on growth in the non-ULIP portfolio.
While growth outlook remains intact, we have increased our FY25 VNB margin estimates, factoring in a recovery in retail protection.
We value SBI Life using the appraisal value framework (FY25E EV plus FY26E Structural Value) with a target price of Rs 1,785 (2.2 times FY26E price/embedded value). Reiterate Buy.
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