Buy SBI Life Insurance; target of Rs 2140: Motilal Oswal

Mumbai, July 28, 2025 — Leading domestic brokerage Motilal Oswal has reiterated its ‘Buy’ rating on SBI Life Insurance, assigning a target price of ₹2,140, reflecting a potential upside of around 15% from current levels. The optimistic forecast stems from the insurer’s consistent performance, expanding market share, and resilient profitability despite a competitive insurance landscape.

Strong Financial Foundation and Market Leadership

SBI Life, a joint venture between State Bank of India and BNP Paribas Cardif, continues to consolidate its position as one of India’s top private life insurers. As per the brokerage’s latest note, the company’s Value of New Business (VNB) margins, persistency ratios, and Asset Under Management (AUM) trends remain favorable, underpinning the bullish sentiment.

“SBI Life’s superior product mix, wide distribution network, and cost-efficiency make it a structural growth story in the Indian life insurance space,” said Anand Dama, Senior Analyst at Motilal Oswal Financial Services. “We expect robust premium growth and margin expansion, which support our target price of ₹2,140.”

The insurer reported a 15% year-on-year increase in APE (Annualized Premium Equivalent) in Q1FY26, with growth driven across protection, annuity, and non-par savings segments. VNB margins held steady at 29%, a key profitability indicator. The total AUM also crossed ₹3.2 lakh crore, reflecting investor confidence and increasing policyholder inflows.

Product Innovation and Distribution Edge

Motilal Oswal noted SBI Life’s innovation in product design, including the successful launch of ULIP variants and enhanced annuity options, which are attracting higher participation from the millennial and mass-affluent segments. Moreover, SBI Life’s deep integration with SBI Bank’s vast network gives it unparalleled access to a large and diverse customer base across India, especially in underpenetrated Tier 2 and Tier 3 cities.

“Their banca channel continues to outperform peers due to strategic alignment with SBI’s retail strategy,” the report emphasized. “We see continued traction in ULIPs and protection-led products which help maintain healthy margins.”

Favorable Regulatory and Macro Tailwinds

The life insurance sector in India is benefiting from both structural demand and regulatory reforms. Rising financial literacy, an expanding middle class, and greater awareness of retirement planning are driving higher penetration. Furthermore, the IRDAI’s push for insurance inclusion and digitization is expected to benefit early adopters like SBI Life.

Motilal Oswal also highlighted that India’s life insurance penetration, at approximately 3.2% of GDP, remains significantly lower than global averages, suggesting long-term headroom for growth.

Competitive Dynamics and Valuation Comfort

Despite increasing competition from HDFC Life, ICICI Prudential, and Max Life, SBI Life has maintained a stronghold due to its pricing discipline and focus on cost containment. It enjoys one of the lowest expense ratios in the private insurance space, giving it a cost advantage.

At the current market price of around ₹1,860, the stock trades at a reasonable valuation of 2.3x FY26E Embedded Value, which Motilal Oswal considers attractive. The brokerage forecasts a 17% CAGR in VNB over the next two years, aided by product diversification and improving persistency in the 61st month cohort.

Investor Outlook: Long-Term Wealth Creation

SBI Life has consistently outperformed the benchmark indices over the past five years and remains a preferred pick in the financials sector among institutional investors. With a strong balance sheet, low leverage, and stable solvency ratio, it offers a combination of growth and stability.

“We advise long-term investors to accumulate on dips,” Dama added. “The structural drivers of life insurance growth remain intact, and SBI Life is ideally positioned to capture this opportunity.”

Foreign institutional investor (FII) holding in the company has remained steady, signaling continued global interest in India’s insurance growth story.

Risk Factors to Watch

While the outlook remains favorable, the brokerage cautioned about certain headwinds. These include:

• Regulatory changes impacting product pricing.

• Unexpected spike in claims, especially from group protection.

• Margin pressures due to increased competition in high-yield segments.

However, Motilal Oswal believes these risks are manageable and well mitigated through SBI Life’s prudent underwriting and risk controls.

With a strong business franchise, robust earnings visibility, and macro tailwinds, Motilal Oswal’s ₹2,140 target for SBI Life reflects confidence in the company’s long-term growth trajectory. For investors seeking exposure to India’s burgeoning insurance market, SBI Life offers a compelling opportunity for both capital appreciation and portfolio diversification.