Jefferies has retained its 'Buy' rating and raised the target price to ₹2,600 for SBI Life Insurance, implying an upside potential of around 40% from current levels. The global brokerage's bullish view is driven by SBI Life's strong Q1FY27 performance, where the company delivered a better-than-expected Value of New Business (VNB) that came in 19% ahead of Jefferies' estimates and 13% above market expectations. The key driver was robust Annualised Premium Equivalent (APE) growth of 36% year-on-year, with a large group term insurance policy playing an important role in this growth.
Life insurers reported mixed performance in July 2026, with LIC, Bajaj Life, and Axis Max Life posting strong growth while HDFC Life saw a decline in APE. According to CNBC TV18, LIC reported 24% growth in new business premium with APE rising 14% and retail APE increasing 10%. Bajaj Life Insurance recorded 20% growth in new business premium with both APE and retail APE rising 15%. Axis Max Life reported 19% increase in new business premium with APE and retail APE growing 16% each. Canara HSBC Life also recorded strong growth with new business premium rising 24% and APE increasing 16%.
Among the insurers covered by Nomura, Axis Max Life led total APE growth at 15% year-on-year in July, followed by ICICI Prudential Life at 14%. SBI Life reported 9% growth, while HDFC Life's total APE declined 2%. According to CNBC TV18, ICICI Prudential Life recorded 21% growth in new business premium with APE jumping 29% and retail APE increasing 9%. However, HDFC Life reported 16% growth in new business premium but its APE declined 2% and retail APE fell 7%, classified as weak growth against a strong base.
SBI Life's Q1FY27 performance was bolstered by exceptional growth across multiple channels. Agency APE grew 24% year-on-year during the quarter, while group protection saw a sharp jump with APE of ₹1,230 crore, exceeding the amount generated from the product during the entire previous financial year. Individual products also gained traction, with annualised premiums from participating, non-participating and individual protection policies growing 33%, 26% and 19% respectively. The company's product mix improvement was another positive factor, with the share of unit-linked insurance plans (ULIPs) declining while protection and non-participating products gained ground.
Despite strong growth, SBI Life faced some margin pressures during the quarter. The Value of New Business margin declined by around 125 basis points year-on-year to 26.2%, attributed to the loss of input tax credit, unfavourable product mix and changes in operating assumptions. However, Jefferies expects improvement ahead, projecting the VNB margin to reach 29% by FY28. The brokerage believes SBI Life could benefit from continued shift towards protection products, stabilising costs and GST impact becoming part of the base from the second half of the year. Jefferies has increased its FY27-FY29 VNB estimates by 1-3% and continues to view SBI Life as its preferred stock in the life insurance space.
Nomura flagged a potential regulatory catalyst for the sector, with media reports suggesting the regulator could release a draft document on distribution reforms by the end of August. According to Nomura, this regulatory development represents a key trigger for the sector. The brokerage emphasized that the base remains tepid until November 2026, indicating ongoing challenges in the insurance distribution landscape.
