SBI Life shares slide despite positive analyst commentary; Check latest targets

Shares of SBI Life Insurance were trading around 3% lower on Thursday, January 29, despite the insurer reporting earnings broadly in-line with expectations and brokerages maintaining a bullish stance on the stock.

For the December quarter, SBI Life posted a nearly 5% year-on-year rise in net profit, led by strong premium collections amid improved affordability for retail insurance buyers. Net profit rose to ₹577 crore for the three months ended December 31, compared with ₹551 crore in the year-ago period.

Net premium income grew a healthy 22% year-on-year to ₹30,245 crore during the quarter. One-time premiums increased 24%, while renewal premiums from existing policies jumped nearly 21%.

Management said the GST exemption on individual insurance policies played a key role in boosting demand during the quarter, as it improved affordability for policyholders.

However, operating costs rose sharply. Management expenses climbed over 45% on-year to ₹3,519 crore, driven by a 28% increase in commissions paid to agents and a 36.6% rise in employee-related costs.

Brokerages, however, remained constructive on the insurer's outlook.

HSBC reiterated its 'Buy' rating on SBI Life with a price target of ₹2,410.

The brokerage said robust value of new business (VNB) growth in Q3FY26, driven by broad-based growth in annualised premium equivalent (APE) across key channels and a favourable product mix.

HSBC said SBI Life's strong execution and projected EV CAGR of 18% over FY26-28, which it believes justifies a valuation premium over peers. It also raised its VNB estimates by 1%-2% for FY26-28.

Bernstein maintained its 'Outperform' rating with a price target of ₹2,550, citing that the December quarter is seasonally significant for SBI Life and that the company delivered a healthy performance.

New business sales rose 24% on-year, while margins stood at 26.6%, factoring in the GST impact.

The brokerage said SBI Life continues to guide for a gross margin impact of around 150 basis points in FY27, although a better product mix is expected to reduce the net impact to 30-40 basis points.

It added that SBI Life is trending above its FY26 growth guidance of 13%-14%, with margins holding within the guided 26%-28% range despite GST-related headwinds.

Jefferies also retained a 'Buy' rating and raised its price target to ₹2,510.

The brokerage said Q3 VNB came in at ₹2,300 crore, up 22% YoY and broadly in line with estimates, aided by strong premium growth, an improved product mix, and higher attachment of protection products and riders.

While the sharp improvement in APE growth from 10% in Q2 to 24% in Q3 was encouraging, Jefferies said that management chose to reiterate its FY26 growth guidance rather than upgrade it. Overall operating trends were seen as steady.

Goldman Sachs reiterated its 'Buy' rating with a price target of ₹2,385.

The brokerage described the performance as commendable despite GST-related margin headwinds, noting that management expects the full-year margin impact to moderate to around 30-40 basis points.

Nomura, meanwhile, maintained its 'Buy' rating with a price target of ₹2,455.

The brokerage said that APE growth is running ahead of guidance and it expects SBI Life to deliver the second-best VNB growth in FY26 among the life insurers it covers.

It also pointed to relatively lower persistency challenges compared with peers and strong traction in new par products. Nomura expects healthy APE momentum to continue in the March quarter, although it flagged a high base for VNB margins.

Management, it added, expects growth momentum to sustain into FY27.

Shares of SBI Life Insurance Company Ltd. are now 2.70% lower at ₹1,997.80. The stock has climbed 40% in the past 12 months.

Note To Readers

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.