SBI Life Insurance - Q2FY21 Result Update - YES Securities

Key highlights of Q2 FY21 performance

- NBP - NBP was at Rs59bn and registered a growth of 27%, which was better than our forecast of 18%. The growth was led by a sharp 71% jump in single premium while First year premium registered a de-growth of 9%.

- APE - APE at Rs27bn was higher than our estimates of Rs26bn. APE de-grew by 3.6% yoy and grew by 113%qoq. The de-growth was led by 20% decline in par business, 25% fall Non-Par business and 13% fall in ULIP, however the de-growth was offset by 58% jump in individual protection business and 95% yoy surge in group business.

- APE Mix - Share of Protection surged 274bps and that of group business increased by 766 bps. This was offset by decline of 182bps, 253bps and 641 bps in share of Par, Non-Par and ULIPs respectively.

- VNB & VNB Margin - Q2 FY21 VNB at Rs5.4bn was 4% lower than our forecasts of Rs5.6bn, while VNB margin at 19.9% was below our estimates of 21.7%. On a yoy basis VNB margins contracted by 36bps.

- Persistency improvement - Sequentially, persistency except for 61st Month improved across all time periods. On a yoy basis only 49th month persistency saw a decline.

- Opex and commission ratios - Cost ratios have improved significantly with commission ratios falling 75bps yoy whereas Opex ratio improved by 141bps yoy to 4.6%

- EV - EV improved by Rs49bn (19%) to Rs312bn from March 2020.

- Profits - PAT came at Rs3bn lower than our expectation of Rs3.8bn due to higher than expected benefits paid.

Q2 FY21 result, a mix bag of performance, attractively priced at FY22E P/EV of 2.1x, Retain BUY

We remain positive on SBI Life with consistent performance on the protection business and revival in the ULIP business. It continues to focus on extracting more from its bancassurance and agency channels. Limited presence on the online platforms, however, is a dampener. The stock trades at FY22E P/EV of 2.1x, which we find attractive. We maintain our estimates and recommend BUY with a 1-year price target of Rs1,006.

Shares of SBI Life Insurance Company Ltd was last trading in BSE at Rs.778.75 as compared to the previous close of Rs. 770.3. The total number of shares traded during the day was 54462 in over 3346 trades.

The stock hit an intraday high of Rs. 784.95 and intraday low of 765.3. The net turnover during the day was Rs. 42317281.

Source : Equity Bulls

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