Nomura keeps SBI Life at Buy as top sector pick, but cuts target to Rs 2,340

what happened

According to TradingView, Nomura has kept its Buy rating on SBI Life Insurance and retained the shares as its top pick in the life insurance sector. The brokerage cut its target price to Rs 2,340 from Rs 2,440 after revising its risk-free rate assumption.

The value of new business (VNB) margin reached 29.2% in the second quarter of FY27, 50 basis points above Nomura's estimate. Excluding GST, margins would have been 30% for the quarter and 28.8% for the first half. Total annualised premium equivalent grew 7.4% year on year, with non-participating products up 27%, annuities up 28% and individual protection up 14%. Individual APE rose 12% in the first half, below the company's 14-15% guidance, but management reaffirmed the target and expects a strong third quarter driven by the bancassurance channel.

Nomura forecasts APE growth of 16% and VNB growth of 17% for FY27. It also flagged the risk that lower commissions under distribution reforms could intensify competition in SBI Life's home market.

why it matters

SBI Life shares have fallen 20% year to date, compared with a 13% drop in the Nifty, largely over concerns about the regulator's distribution reform proposals. Management says the company is the least exposed to the consultation paper. For investors in insurers, demand for guaranteed non-par products amid higher bond yields and changes in agency and bank sales terms are the key factors to watch.

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