Axis Securities has reaffirmed its BUY recommendation on SBI Life Insurance, upgrading its target price to Rs 2,450 following a strong Q3FY26 earnings performance that exceeded expectations across all core metrics. The insurer delivered broad-based growth in New Business Premium (NBP), Annualised Premium Equivalent (APE), and Value of New Business (VNB), supported by stable margins, resilient bancassurance traction, and improving operating leverage. Despite a structural GST headwind, management remains confident of sustaining VNB margins within the 26–28% band, underpinned by a favourable shift in product and distribution mix. Axis expects SBI Life to deliver healthy growth over FY26–FY28.

Q3FY26 performance underscores execution strength

SBI Life reported a robust operating quarter, delivering results that surpassed Axis Securities’ estimates on all key parameters.
New Business Premium (NBP) grew 23% YoY and 17% QoQ, reflecting sustained momentum across product lines.
Annualised Premium Equivalent (APE) stood at Rs 86 billion, registering 24% YoY growth and a sharp 45% sequential increase, while
Value of New Business (VNB) rose 22.5% YoY to Rs 22.9 billion.

The quarter’s performance reinforces SBI Life’s ability to scale profitably even in a challenging cost environment, with VNB margins at 26.6%, firmly within management’s guided range.

Margins remain resilient despite GST headwinds

A key investor concern over recent quarters has been the structural impact of GST rationalisation on life insurance margins. SBI Life’s Q3FY26 results offer reassurance on this front.

Management reiterated its commitment to sustaining VNB margins between 26% and 28%, even as GST continues to exert pressure on commission payouts. While the full-year GST impact was earlier estimated at around 174 basis points, SBI Life has successfully offset much of this through:

• A more favourable product mix
• Improved distribution efficiency
• Operating leverage benefits

As of Q3FY26, the cumulative GST impact on margins stands at approximately 150 bps for the quarter and 110 bps on a year-to-date basis. Going forward, management expects the residual drag to be limited to just 30–40 bps for FY26, assuming continued improvement in business mix.

Bancassurance channel stability anchors growth

SBI Life’s bancassurance franchise continues to serve as a stable growth engine. During Q3FY26, the banca channel accounted for 62% of total APE, with SBI-driven APE growing 16% YoY. Branch productivity improved meaningfully to Rs 6.4 million, highlighting deeper penetration and better sales efficiency.

Importantly, while bancassurance growth has moderated to high single digits, it has avoided de-growth over the past several years. The non-SBI banca channel delivered a faster 24% YoY growth, adding diversification to the distribution mix.

Management expects bancassurance to remain a core contributor, though its growth may trail overall business expansion as agency and other channels scale faster.

Agency expansion and calibrated branch rollout

SBI Life continues to invest steadily in its agency network. During Q3FY26, the company added 94,000 agents on a gross basis, while the agency channel delivered 11% YoY growth, supported by agent productivity of approximately Rs 3 lakh.

The insurer added 66 branches over the first nine months of FY26, following a disciplined expansion strategy that prioritises stabilisation of existing branches before entering new locations. This measured approach is helping maintain cost discipline while supporting long-term franchise expansion.

Product mix evolution supports margin accretion

A notable theme during the quarter was the evolution of SBI Life’s product portfolio.
Protection products delivered strong traction, with premiums and sum assured growing sharply, while non-PAR products excluding protection grew at a moderate pace due to distributor focus shifting temporarily toward newly launched participating (PAR) products.

The company introduced new PAR offerings, particularly in the money-back and child segments, which saw healthy demand. Management now expects PAR products to form 15–20% of the overall mix, up from roughly 10% currently.

Over time, the combined growth of PAR and non-PAR products is expected to remain margin accretive, supporting VNB stability.

Persistency trends largely stable, with selective pressure

SBI Life continued to demonstrate progress on customer retention metrics.
The 13th-month persistency improved by 101 basis points YoY to 87.1%, reflecting improved quality of new business and better customer engagement.

However, the 61st-month persistency declined to 58.8%, down from 62.7% last year, highlighting the need for continued focus on long-term policyholder retention. Management remains confident that ongoing product and servicing initiatives will help stabilise longer-tenure persistency over time.

Valuation, estimates, and target price revision

Axis Securities has revised its valuation framework, now valuing SBI Life at 2.3x September 2027E Embedded Value, compared with its earlier multiple of 2.25x.

This revision reflects confidence in the insurer’s execution capabilities, stable margin outlook, and balanced growth profile. Based on this methodology, Axis has increased its target price to Rs 2,450 per share, implying an upside of approximately 19% from the current market price of Rs 2,053.

Financial snapshot and outlook (FY26–FY28E)

Axis expects SBI Life to deliver a 16% / 14% / 12% CAGR in NBP, APE, and VNB, respectively, over FY26–FY28, supported by a stable regulatory environment and improving operating leverage.

Risks to monitor

While the outlook remains constructive, Axis flags certain risks that investors should monitor closely:

• A sharper-than-expected slowdown in APE growth
• An adverse shift in product mix affecting margins
• Sustained pressure on long-term persistency ratios

Any material deviation on these fronts could impact profitability and valuation assumptions.

Investment conclusion

SBI Life’s Q3FY26 performance reinforces its positioning as one of India’s most consistently executed life insurance franchises. Strong growth visibility, disciplined cost management, and resilience against regulatory headwinds underpin Axis Securities’ confidence in the stock.