Earnings & Results
Motilal Oswal Retains Buy on SBI Life After Q2 as VNB Margin Beats at 29.2%
By News Desk ·
Key takeaways
- SBI Life reported Q2 new business APE of Rs 6,370 crore, up 7% year on year.
- The insurer's Q2 VNB margin was 29.2%, against a 27.5% estimate and 27.9% a year earlier.
- Motilal Oswal retained its Buy rating on SBI Life with a revised target price of Rs 2,100.
SBI Life Insurance reported new business annual premium equivalent of Rs 6,370 crore for the September quarter, up 7% year on year, and a value of new business margin of 29.2%. NDTV Profit reported that Motilal Oswal retained its Buy rating on the insurer with a revised target price of Rs 2,100.
Inside Motilal Oswal's SBI Life Call
Absolute value of new business rose 12% year on year to Rs 1,860 crore, in line with estimates, and the 29.2% margin compared with 27.9% in the same quarter a year earlier and a 27.5% estimate. For the first half of FY27, annual premium equivalent grew 18% year on year and value of new business grew 19%, at a margin of 27.9% against 27.8% a year earlier.
Motilal Oswal kept its annual premium equivalent estimates and raised its FY27 value of new business margin by 50 basis points after the quarter. The brokerage held its embedded value estimates, with operating return on embedded value at about 18% for FY27 and FY28, and set its target at 1.9 times FY28E price to embedded value.
The brokerage attributed the margin to a favorable product mix, rising rider attachment rates and strong business volumes. It expects steady traction in non-linked products and resilient protection demand to keep margins at the upper end of the 26-28% guidance band, with agency and digital channel investment supporting growth alongside a gradual recovery in bancassurance.
SBI Life is a publicly listed subsidiary of State Bank of India that sells term, savings, ULIP, retirement, child and group life products through 1,230 branches and more than 300,000 distribution partners, according to akta.pro company records.
SBI Life's Profit and Embedded Value
SBI Life reported shareholder profit after tax of Rs 550 crore for the quarter, up 11% year on year and a 10% miss, while first-half profit after tax grew 17%. Embedded value at the end of the first half stood at Rs 87,350 crore, up 15% from Rs 80,790 crore at the end of FY26.
Excluding the GST impact, the value of new business margin would have been 28.8% for the first half and 30% for the quarter, and the company maintained its FY27 guidance of 26-28%. Agency channel growth is expected to normalise over the next couple of months while supporting the overall FY27 growth target of 14-15%.
Rider Launch and Q2 Profit Ahead of the Review
SBI Life launched a Waiver of Premium rider on October 27 that waives all future premiums upon specified contingencies such as critical illness or disability, The Tribune reported. CNBC TV18 reported the rider applies to select life insurance products and also covers death of the proposer or life assured.
On the same day, SBI Life reported a 10% year-on-year rise in net profit to Rs 549 crore for Q2 FY2026-27, up from Rs 495 crore, with net premium income up 8.2% to Rs 26,887 crore and a solvency ratio of 1.97, NDTV Profit reported.
What Comes Next for SBI Life
Motilal Oswal expects agency channel growth to normalise over the next couple of months, and SBI Life has maintained its FY27 value of new business margin guidance at 26-28% alongside an overall FY27 growth target of 14-15%.