Source: Business Today
SBI Life Insurance Company will announce its Q4FY25 numbers on Thursday, April 24, and brokerages expect a mixed bag with moderate APE growth, pressure on Value of New Business (VNB) as well as divergent trends in the margins. Expectations from Nuvama Institutional Equities, Yes Securities and Kotak Institutional Equities provide differential views for the insurance firm’s quarterly numbers, led by the product mixture and the business momentum seen until February.
APE Growth: Modest but Varies Across Estimates
Q4 FY25 Annualised Premium Equivalent (APE) is projected between ₹5,347 crore and ₹5,740 crore. Among them, Nuvama sees the highest at ₹5,740 crore, a 7.8% YoY growth but a 17.2% sequential contraction, driven by strong traction in ULIPs. APE is expected to remain flat YoY at ₹5,347 crore but would see a sharper 23 per cent quarter-on-quarter (QoQ) dip, according to Yes Securities
“SBI Life reported flat APE numbers in the first two months of the quarter. The low base in March 2024 will likely lead to a sharp rise in APE growth to 15% yoy in March 2025 and 5.5% in 4QFY25. The VNB margin will likely remain stable sequentially at 27%,” a Kotak note said.
VNB Forecasts Show Most in Decline, Some Stable
The VNB range is between ₹1,444 crore and ₹1,522 crore. Nuvama sees VNB of ₹1,480 crore, down 1.7% YoY and 21.1% QoQ. According to Yes Securities, its estimates stand at ₹1,444 crore, which translates into a 4% contraction on both counts. Kotak has a more favourable, but still cautious, outlook with a VNB estimate of ₹1,522 crore—1.6% YoY growth but down 18.8% sequentially.
VNB Margins: Compression to Reign, Kotak and Yes Be the Exceptions
Margins remain under scrutiny. Nuvama sees VNB margins dropping to 25.7%, down 250 basis points (bps) YoY and 128 bps QoQ, attributing it to a greater share of low-margin products. Kotak, however, forecasts a relatively stable margin of 27.1%—down 103 bps YoY but slightly improving by 4 bps QoQ. Yes, Securities also projects a 5 bps sequential uptick, citing favourable shifts in product mix.
“We pencil in new-business growth assumption based on trend observation till February 2025, When SBI life had displayed NBP/APE growth of 4%/ 6% for 2M4QFY25 (January and February 2025) over 2M3QFY25 (October and November 2024)
We pencil in the VNB margin expansion of 5 bps QoQ due to change in product mix ” Yes Q4 preview note said.
New business premium expected at ₹9,449 crore, 23% YoY, 10% QoQ decline; Yes Securities Even so, the brokerage has retained a ‘Buy’ call on the stock, with a target of ₹1,920, as it sees gradual improvement in product mix and long-term growth visibility.
Important Monitor Factors: Product Strategy and Bancassurance Channel
With VNB and margin forecasts remaining muted, brokerages highlight management commentary as key. It will concentrate on how SBI Life intends to grow returns through its bancassurance and digital distribution network and how it plans to rebalance the product portfolio toward higher-margin segments.
Outlook
With SBI Life approaching its Q4FY25 earnings release, the focus will be on how it manages margin headwinds despite only minor headway on new business growth. However, the insurer’s ability to sustain or improve VNB margins through a more prudent product mix and channel optimization will be key in retaining investor appetite.
