HDFC Life Q1 Preview: Double-digit APE growth likely, margins to expand as product mix shifts

During the April–June period, HDFC Life’s stock price climbed around 19 percent

Private life insurer HDFC Life is expected to deliver double-digit growth in its annual premium equivalent (APE) for the April–June quarter (Q1FY26), fueled by new premium policies. The value of new business (VNB) is also projected to post a double-digit YoY increase, according to analysts. The company is scheduled to announce its quarterly results on July 15, 2025.

According to a poll of five brokerages conducted by Moneycontrol, HDFC Life’s APE is expected to rise to Rs 3,273 crore in Q1FY26, compared to Rs 2,866 crore in Q1FY25. APE is a key measure that captures the total value of new business by combining the annual premiums of regular policies with one-tenth of single premiums.

Meanwhile, VNB is likely to grow to Rs 834 crore in Q1FY26 from Rs 720 crore in the same quarter last year. VNB reflects the profitability of new policies sold during a specific period.

Estimates of analysts polled by Moneycontrol are shown to be in a narrow range, meaning any positive or negative surprises may elicit a sharp reaction in the stock price. Among the brokerages polled, Motilal Oswal rolled out the most bullish projections while Centrum forecasted the slowest growth for HDFC Life.

What factors are driving the earnings?

Gross premium income: According to Motilal Oswal, gross business premium is expected to sustain its growth trajectory. First-year premiums are projected to grow by about 12.5 percent YoY in Q1FY26, while renewal premiums may rise by approximately 17 percent and single premiums by as much as 29 percent YoY.

Margin expansion: Brokerages anticipate that HDFC Life’s VNB margins will expand by 90 basis points year-on-year to around 26 percent in Q1FY26, compared to 25.1 percent in Q1FY25. This improvement is attributed to a higher proportion of non-participating (non-par) and protection products, as well as the base effect of high unit-linked insurance plan (ULIP) sales in the prior period.

Reduced regulatory noise: Analysts at Emkay noted that the fading regulatory overhang — pertaining to the Union Budget, Income Tax Bill, and bancassurance norms — has led to a material re-rating of insurance stocks in recent months. With growth slowdown now largely priced in, potential positive regulatory developments and a possible recovery in growth could continue to support the stock’s performance.

What to look out for in the quarterly show?

Investors will closely monitor the product mix, as well as management commentary regarding the outlook for non-par and protection products.

During the April–June period, HDFC Life’s stock price climbed around 19 percent, outperforming the Nifty 50 index, which gained about 8 percent in the same period.

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