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Result Highlights

* NBP – NBP was at 62bn and registered a strong growth of 63%, which was better than our forecast. The growth was led by an almost doubling of single premium while First year premium also registered a healthy growth of 45%.  

* APE – APE at Rs39.7bn was higher than our estimates of Rs37.9bn. APE grew by 47.6% yoy and 13.4% qoq. The growth was led by strong performance in the annuity and the non‐par segment.   

* APE Mix – Share of protection was stable at 6.3%, while that of ULIP declined by 24bps yoy. Share of non‐par and annuity has been on a rise, with these products selling aggressively across all channels.

* VNB & VNB Margin – Q4FY21 VNB on actual tax rate basis at Rs8.8bn was better than our forecasts of Rs8.3bn, while VNB margin at 22.2% was in line with our estimates of 22.0%. On a yoy basis VNB margins expanded by 209bps. On effective tax rate basis VNB margins were at 27.7% (yoy expansion of 652bps).  

* Profits ‐ PAT came at Rs5.3bn, which was flat on y/y basis and more than doubled sequentially

Our View ‐ 

SBI Life performance was better than our forecasts (our first cut had an error on VNB margins, find below revised results analysis). The product mix has been moving favorably with rising share of non‐par, annuity and continued momentum in protection (both retail and group). Going ahead too, we expect the momentum to sustain especially in the banca channel, where both SBI (through rekindled strategy) and non‐SBI (new tie ups yet to scale up) would see healthy growth.

With new launches in the protection segment and expected increase in attachment rate in SBI channel, overall protection business to see relatively healthier growth. Positive rub‐off on VNB margins would be seen and we expect 100bps expansion each for the next couple of years. We have upgraded our estimates by 10% to factor in a stronger performance in Q4. The stock trades at FY23E P/EV of 2.0x on actual tax rate basis and 1.8x on effective tax rate basis (comparable with peers). We maintain our BUY rating with a 1‐ year price target of Rs1,221 (Rs1,137 earlier).

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