CMP (NSE) 15:56, 18 Jun
Last updated on
04 May, 2021
Leading the way on VNB growth and protection!
Retail protection growth remains an outlier: Retail protection APE grew 47% YoY, a third consecutive quarter of strong growth even as peers struggle to show growth, while group protection NBP grew 28% YoY. Management indicated that growth in retail was driven by their customer demand, which is a competitive advantage for SBILI, in our view. SBILI registered 50% YoY growth in savings APE with non-par/ ULIPs growing 100%/47% resp., showing strong product diversity.
VNB margin expansion outclasses peers: VNB margin expanded by 210bps YoY while VNB grew 63% YoY outclassing peers. The solvency ratio at 215% remains comfortably high. Despite ULIP share at 70% of APE, SBILI’s renewal premium growth was healthy at 16% YoY and was not impacted by tax changes around high ticket ULIPs and new tax regime. Surrender ratios were also at just 3.95% in FY21
Comforting Valuations: We maintain SBILI as our top pick. The stock is currently trading at 2.1X FY23ii P/EV, at a 43% discount to HDFCLI. We forecast 25%/16% VNB/EV Cagr over FY21-23ii. We recommend a Buy rating on the stock with a target price of Rs1144 implying a ~2.5X 2YF P/EV