VNB margin surprise along with strong growth; CLSA ups target price to Rs 1250/share – About Your Online Magazine


MAY 04, 2021 11:20 AM IST | ENGLISH | MONEY AND FINANCE | GENERAL AUDIENCE

Poonam Saney

Poonam Saney

SBI Life Insurance reported a strong Q4 with strong APE growth led by the rebound in ULIP, CLSA increased the target price to Rs 1250 per share. The life insurer continued to report strong traction in Non-PAR / Annuity and Individual Protection. FY21’s VNB margins improved to 23.2%. Persistence improved between the cohorts, with the persistence of the 13th / 61st month improving by 180bp and 170bp in the annual comparison, respectively, to 87.9% / 61.6%. The cost leadership continues with the total expense ratio decreasing to 8.3% in FY21 against 9.9% in FY20. Embedded Value (EV) based on the real tax rate grew by 27% YoY to Rs 33390 cr (EV based on ETR is around Rs 36400 cr).
CLSA ON SBI LIFE
Maintain PURCHASE, target increased to 1250 / share
Undemanding evaluation; keep BUY
Increasing FY22 / 23 VNB estimates 9-10%.
VNB surprise; wide variation in persistence can lead to other advantages
Growth of APE in FY21 of 7% Y / Y; strong pickup in 4QFY21
Cost ratios continue to improve; best in the industry

CS ON SBI LIFE
Keep neutral, aim at `930 / share
Margins tend to stay within the range with a stable product mix
Continue to expect the pace of expansion of VNB to be moderate in the medium term
The growth of the EPA leads to a ~ 7% increase in EPS FY22 / 23E

Let’s hear from Poonam Saney to learn more about SBI Life Insurance’s fourth quarter results



Paula Fonseca