HDFC Life Insurance Company (HDFC Life), one of the largest private life insurers in the country, is expected to report a year-on-year growth of 14-22 percent in its standalone profit after tax (PAT) on July 19, when it will declare its results for the quarter ended June 2022.
The brokerages expect the company to achieve a profit of Rs 340-370 crore, which is expected to be fuelled by the company’s continued focus on non-par individual business, healthy growth in new business premium as well as value of new business (VNB) and strong traction in Annual Premium Equivalent (APE). On a sequential basis, however, the PAT is expected to remain flat with a negative bias of 3-5 percent.
The net premium income for the HDFC group company is expected to rise around 22-23 percent on year to Rs 920-925 crore. Compared to the previous quarter, however, the net premium income is expected to take a dip of about 35 percent.
The company had reported a standalone PAT of Rs 302 crore in the corresponding quarter a year ago when it had earned a net premium income of Rs 7,538 crore.
The profit for the company during the January-March period was recorded at Rs 358 crore on a net premium income of Rs 14,290 crore.
Brokerage Views
Motilal Oswal Financial Services Ltd
The brokerage forecasts the net premium income for the quarter at Rs 9,261 crore, growing at 23 percent year on year, while on a sequential basis, the net premium income is seen declining by close to 35 percent.
The brokerage expects the new business premium to see healthy growth backed by strong trends in Annuity/PAR businesses. It expects VNB growth to remain healthy with margin expansion on a YoY basis. On a sequential basis, however, the margins are likely to be under pressure.
Motilal Oswal estimates the first year premiums of Rs 1,740 crore growing at 35 percent on year but dipping by 32 percent compared to the previous quarter.
Renewal premiums at Rs 4,490 crore are seen growing by 15.4 percent year on year. On a sequential basis, this is a decline of 39 percent.
Single premiums are forecasted at Rs 3,220 crore, a YoY growth of about 30 percent but a sequential decline of 28 percent.
The brokerage expects a PAT of Rs 337 crore for the quarter, which is a growth of 11.6 percent on year and a 7 percent decline over the last quarter.
Among the key operating metrics, new business APE is estimated at Rs 2,060 crore with a YoY growth of 32.3 percent and a sequential decline of 32 percent.
Motilal Oswal estimates the VNB for the quarter at Rs 560 crore, rising by 36.6 percent on year but shrinking by 38 percent from last quarter. VNB margins are seen improving by 80 bps from the year-ago period to 27.0 percent but on a sequential basis, the VNB margins are expected to tank 240 bps.
The total assets under management (AUM) for the quarter are expected at Rs 2,00,700 crore, increasing by 10.7 percent on year and witnessing a marginal decline of 1.7 percent QoQ.
The expense ratio is expected to see an uptick, in line with a pick-up in business growth compared to the year-ago period while Return on Embedded Value (RoEV) is expected to stay healthy.
The experts will be focusing on any improvement in the persistency ratio of the company.
ICICI Direct
The brokerage forecasts a net premium income of Rs 9,189 crore which is a growth of 22 percent on year but a sequential decline of 35.7 percent.
“For HDFC Life Insurance, continued focus on non-par individual business, protection segment (both individual and group) and base effect of last year is expected to keep new business premium accretion healthy at 28.1 percent YoY to Rs 4,826 crore,” the brokerage said in its report.
Lower infections and mortality rate is expected to keep tabs on claims leading to a surplus in paycheck protection programme (PPP), expected at Rs 271 crore in Q1FY23 compared to Rs 59 crore in Q1FY22, a jump of 357 percent on year but a sequential decline of 51 percent.
“Thus, healthy premium growth, steady efficiency and moderation in claims are expected to lead to earnings growth at 23 percent YoY to Rs 371 crore,” the brokerage said in its report.
Kotak Institutional Equities
“We expect HDFC Life to deliver 32 percent APE growth on the back of 33 percent growth reported in first two months of FY23,” a report from the brokerage said.
Kotak expects the APE at Rs 2,061 crore for the quarter, a YoY growth of 32 percent but a sequential de-growth of 32.4 percent.
“Improving operating leverage and better persistency will likely drive 130 bps VNB margin expansion,” Kotak added in its report.
VNB is estimated at Rs 566.7 crore, jumping by 38.5 percent year on year but reducing by 36.7 percent sequentially with VNB margins likely at 27.5 percent compared to 26.2 percent a year ago and 29.4 percent in the preceding quarter.
HDFC Life opened with a gain of Rs 4.5 at Rs 544.4 on July 18 at the National Stock Exchange. The stock has lost 22 percent over the past one year and is trading flat over the last one month.
Disclaimer: The views and investment tips of investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
