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SBI Life’s Q1FY26 performance was impressive, with healthy VNB margin of 27.4% (up by 60bps YoY) vs consensus/our estimate of 27.5%/27%, respectively. The improvement in VNB margin was largely driven by the shift in product mix, from ULIP toward Non-Par and Protection products. The company maintains focus on growing these two segments, while diversifying the product mix. The management targets expanding the agency channel, driving deeper penetration into tier-2 and beyond markets; also, with a shift toward a diversified product mix, Agency channel margins are likely to witness improvement. Overall, the management re-iterated its guidance of growing Individual APE in the mid-teens, while maintaining VNB margin within the ~27- 28% range. We keep our estimates unchanged and, given the favorable risk reward, we re-iterate BUY on SBILIFE with unchanged Jun-26E TP of Rs2,100, implying FY27E P/EV of 2.2x. The market seems to be underappreciating its sustained performance delivery, which echoes in its FY17-25 numbers – it has compounded EV and VNB at 19.8% and 24.4%, respectively, without any external capital infusion while seeing interest rate movements, equity volatilities, and the Covid-19 shock.

Product mix shift drives healthy margin delivery SBILIFE delivered a robust and largely in-line results in Q1FY26 – APE (Rs39.7bn), VNB (Rs10.9bn), VNB margin (27.4%) and EV (Rs742.6bn), largely in-line with consensus/our estimates (Exhibit 1). Product mix shift toward Non-Par and Protection products from ULIPs drove a 60bps YoY margin expansion. Resultantly, VNB at Rs10.9bn grew 12.1% YoY and was in line with our/consensus estimate of Rs10.8bn/Rs10.9bn, respectively. Persistency ratio across the 13M and 61M cohorts saw improvement, whereas opex ratio witnessed a slight elevation.

Focus remains on growing the agency while diversifying the product mix While Banca has remained the primary contributor to the distribution mix, the management has strategically prioritized expanding the agency channel. During the quarter, 36 new branches were opened with an aim to deepen penetration in tier 2 and beyond markets. Despite the investments in distribution, the management believes productivity improvement and growth in the agency channel should offset the impact on VNB margin. Although agency growth was muted during the quarter, the management remains confident of driving ~25% retail APE growth in the agency channel. Additionally, the company is committed to diversify the product mix toward Non-Par and Protection products. Some green shoots in the banca channel further drive the management optimism around banca growth.

Favorable risk reward, re-iterate BUY With its warhorse distribution channel, strong brand, and low cost structure, SBI Life is poised to deliver sustainable EV compounding. We keep our estimates unchanged; reiterate BUY, with unchanged Jun-26E TP of Rs2,100, implying FY27E P/EV of 2.2x

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