Brokerage firm Prabhudas Lilladher has assigned a target price of Rs 2,200 to SBI Life Insurance. The report points to improved profitability on new policies, despite the company reporting moderate 8% growth in new business premiums during the second quarter.
Prabhudas Lilladher has released a report on SBI Life Insurance, setting a target price of Rs 2,200 per share. The brokerage highlighted the insurer's focus on profitability over pure volume growth, even as the company saw a moderate increase in new business premiums during the second quarter of the 2027 fiscal year.
In the second quarter, SBI Life recorded an Annual Premium Equivalent (APE) of Rs 6,390 crore, which is roughly Rs 63.9 billion. This represents an 8% growth compared to the same period last year. While this figure shows growth, it has been viewed as moderate against the backdrop of the company's full-year guidance of 14% to 15% growth. The company’s management remains confident about hitting these yearly targets, factoring in a higher base effect from the second half of the previous fiscal year.
One of the key points noted in the report is the improvement in the Value of New Business (VNB) margin, which reached 29.1%. In simple terms, this margin measures the profitability of new insurance policies sold. The brokerage attributed this strength to the company shifting its product mix toward policies that offer higher profit margins. By focusing on more profitable segments and managing the impact of GST-related changes, the firm expects these margins to improve further by 20 basis points in fiscal 2027 and 10 basis points in fiscal 2028.
To value the stock, the brokerage used the Price to Embedded Value (P/EV) method, which is a common way to measure the worth of insurance companies based on their current value and future expected profits. They have valued the stock at 1.7 times the expected embedded value for fiscal 2029, a slight adjustment from their previous target of 2.0 times, reflecting a more conservative view of current market conditions.
Investors tracking the insurance sector should be aware that success depends on more than just internal strategy. The Indian life insurance market is highly competitive, with private players like HDFC Life and ICICI Prudential Insurance constantly competing for market share. Additionally, the industry is subject to strict oversight by the Insurance Regulatory and Development Authority of India (IRDAI). Regulatory changes, such as caps on commissions or changes to surrender value norms, can influence how these companies price their products and affect their overall profit margins. Future performance will largely depend on how well SBI Life manages these regulatory pressures while maintaining its growth momentum and product mix quality.