HDFC Life Q3 preview: Double-digit APE growth likely in Q3; input tax credit loss to weigh on margins

HDFC Life will report its December quarter results on January 15

• HDFC Life's APE expected to rise 10 percent YoY to Rs 3,930 crore in Q3FY26
• VNB likely to decline 8 percent YoY due to GST input tax credit losses
• Investors to watch product mix and management outlook on protection products

Did our AI summary help?

HDFC Life is expected to report double-digit growth in annualised premium equivalent (APE) in December quarter, driven by favorable base from surrender charges and GST-led acceleration in protection products. However, profit is expected to be impacted due to losses in GST input tax credit on policies. The private life insurer will report Q3 results on January 15, 2025.

According to a poll of brokerages conducted by Moneycontrol, HDFC Life’s APE is expected to rise by 10 percent YoY to Rs 3,930 crore in Q3FY26, compared to Rs 3,569 crore in Q3FY25. 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 decline by 8 percent YoY to Rs 923 crore in Q3FY26 from Rs 930 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 13 percent YoY in Q3FY26, while renewal premiums may rise by approximately 18 percent and single premiums by as much as 11 percent YoY.

VNB margin contraction: Brokerages expect 200 basis points contraction in VNB margins to 24 percent in Q3FY26  due to losses on GST input tax credit.

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.