The SBI Life Insurance share price has surged over 3% in early trade. Global brokerage firm Jefferies sees strong growth potential ahead. The brokerage has maintained its ‘Buy’ rating on the stock and set a target price of Rs 2,270. This translates to an upside potential of nearly 23% from current levels.
Let’s take a look at the three key factors why the brokerage is bullish on the stock –
Jefferies on SBI Life: Resilient performance with improving protection mix
SBI Life’s September quarter numbers saw a balanced performance despite softer growth in individual segments. The company’s Value of New Business (VNB) for the quarter came in at Rs 170 crore, up 14% year-on-year, comfortably ahead of expectations. This growth, according to the brokerage report, was “aided by better mix and increased attachment of protection on savings.”
While individual Annualized Premium Equivalent (APE) growth was moderate at 6% YoY in the first half, Jefferies noted that momentum picked up strongly in September. The management has “reiterated guidance of 13-14% growth for FY26,” which suggests a sharper 18-20% growth in the second half of the year.
The brokerage also highlighted that group savings products saw higher traction, rising 145% during the quarter, contributing around 5% of APE.
Jefferies on SBI Life: Margins hold firm despite GST drag
Margins have remained one of SBI Life’s biggest strengths. As per the brokerage report, “margins rose by approx. 100bps YoY to 28%, aiding 14% growth in VNB.”
Jefferies noted that the company managed to absorb the GST impact effectively. The brokerage wrote, “The impact of GST on margins in 1H was 80bps, of which 20bps relate to sales post 22nd Sep; on EV, the impact was at 0.5% of the opening EV.”
Despite these headwinds, the management remains confident of sustaining its margin guidance. The report added, “Based on FY25 premium mix, the impact of GST will be 174bps on margins, but with better mix and higher attachments, they plan to limit it to 20–30bps.”
Jefferies on SBI Life: Attractive valuations with potential for re-rating
Jefferies believes SBI Life’s valuation still offers room for upside. The brokerage values the stock at 13x 12-month forward P/VNB, noting that the recent improvement in growth and profitability metrics could trigger a re-rating.
According to the brokerage report, “Uptick in premium growth and stability in margins could aid valuations that are attractive at 13x 12-month forward P/VNB.” Jefferies further expects 14% CAGR in VNB between FY25 and FY28, with a margin of 28% and ROEV of 17% by FY27.
