Shares of SBI Life Insurance Company Ltd. (SBI Life Insurance) rallied sharply on the NSE during morning trade on Friday, reaching a high of ₹1,762, up 9.56% from the previous close of ₹1,608.20, on the back of strong Q4 results announced post market hours on Thursday. The company’s shares opened at ₹1,723.50 and are currently trading at ₹1,678.30, up 4.36%.

SBI Life Insurance's Q4FY25 net profit rose marginally by 0.3% year-over-year, reaching ₹813.5 crore, up from ₹810.8 crore in the same period last year. The insurer saw a strong 12.9% year-over-year increase in renewal premiums, rising from ₹13,003.2 crore to ₹14,680.3 crore. However, single premiums dropped significantly by 42.1%, from ₹7,709.5 crore to ₹4,462.5 crore. Net commissions rose 17.2% year-over-year to ₹998 crore, up from ₹851 crore in Q4FY24.

The company reported a 7% year-on-year increase in the Value of New Business (VNB), reaching ₹59.5 billion for FY25. While net premium income fell by 5%, first-year premiums grew by 7.3%. Assets Under Management (AUM) saw a 15% year-over-year growth, reaching ₹4.48 lakh crore. Persistency ratios improved, though the sharp decline in single premium income remained a notable concern.

Despite results falling short of expectations, JM Financial Research has maintained a "BUY" rating on SBI Life, raising its target price to ₹1,777, up from ₹1,700. Most brokerages have trimmed their Annual Premium Equivalent (APE) growth projections. JMFL noted that, despite a modest 2% year-over-year growth in total APE and a 7% year-over-year rise in individual APE, SBI Life reported robust Q4 margins of 30.5%, driven by a favorable product mix. This marks a 370 basis points improvement in margins quarter-on-quarter.

“We estimate consistent 13% year-over-year growth in APE over FY25-FY27e, with margins holding up. We expect operating variance to reduce but remain positive in the near term; hence, we expect consistent 17%+ Embedded Value (EV) growth year-over-year over FY25-FY27e,” JMFL said in a statement.

There was a notable shift in the savings product mix, with ULIPs declining from 81% to 67%, while non-par products increased from 18% to 29%. Growth in individual protection and annuity products was mixed, with protection rising 3% year-over-year, but annuity saw a 6% drop. Distribution performance was subdued, with bancassurance (banca) growing by 9% year-over-year and agency channels increasing by just 5%. However, the company plans to revamp its agency model ("Agency 2.0") through investments in technology, office infrastructure, and workforce expansion.