Private sector life insurer HDFC Life Insurance Company is expected to report 12 percent on year growth in consolidated net profit on April 26 when it declares results for the quarter ended March.
Experts expect the company to report a net profit of Rs 355 crore on the back of its well-balanced product mix and a strong distribution mix as well as reasonable growth in annual premium equivalent (APE). On a sequential basis, the profit is expected to jump 30 percent.
Net premium income for the HDFC group company is expected to grow 12 percent on year to Rs 14,400-14,500 crore for the quarter. On a sequential basis, growth is expected to be 20 percent.
The company had reported a consolidated profit after tax (PAT) of Rs 319 crore in the corresponding quarter a year ago when it had earned a net premium income of Rs 12,870 crore.
Profit during the October-December period was recorded at Rs 275 crore on a net premium income of Rs 12,126 crore.
Brokerage views
Motilal Oswal Financial Services
The brokerage forecasts net premium income for the quarter at Rs 14,452 crore growing 12.3 percent on an annualised basis and 19 percent sequentially.
The brokerage estimates the new business premiums to remain modest on strong trends in annuity while growth in value of new business (VNB) is expected to remain modest but VNB margins are likely to expand sequentially.
Motilal Oswal estimates first year premiums of Rs 2,557 crore growing seven percent on year and close to 21 percent from last quarter.
Renewal premiums at Rs 7,448 crore are seen growing 17.3 percent on year and 34 percent on quarter.
Single premiums are forecast at Rs 4,496 crore, a on year growth of 7.8 percent but a marginal sequential decline of two percent.
The brokerage expects a PAT of Rs 355 crore for the quarter which is a growth of 11.7 percent on year and a 30 percent increase over the last quarter.
Among key operating metrics, new business APE is estimated at Rs 3,010 crore with on year growth of 4.4 percent and sequential growth of 15.8 percent.
Motilal Oswal estimates the VNB for the quarter at Rs 830 crore, rising 6.4 percent on year and 20 percent from last quarter. VNB margins are seen improving 50 basis points from the year ago to 27.5 percent and by 80 basis points from the previous quarter.
The total assets under management (AUM) for the quarter are expected at Rs 1,98,100 crore spiking 13.9 percent on year and 1.7 percent sequentially.
KR Choksey
“We expect a 12.1 percent on year increase in gross written premium, focusing on new innovative products and healthy demand traction for the annuity segment,” the brokerage said in its note. The growing sentiment in the annuity and credit life segment is likely to continue while the distribution and product mix is likely to remain strong and well balanced.
The brokerage expects the company to register an APE of Rs 3,039 core growing 5.5 percent on year and 17 percent from the previous quarter.
The company is expected to report a PAT of Rs 358 crore which is a growth of 12.7 percent on year and 31 percent sequentially.
“The VNB margins will be muted sequentially on higher base. The persistency ratio is expected to improve, indicating a decent renewal trajectory,” added the brokerage.
VNB is likely to come in at Rs 821 crore, rising five percent on year and 18.2 percent on quarter while VNB margin at 27 percent is an improvement on 28 basis points sequentially but a marginal contraction of 15 basis points on year.
Key points to focus on would be the assumption change in mortality; growth outlook and the change in product mix and margin outlook; cost ratios; and pricing change.
Kotak Institutional Equities
“We expect 6.5 percent on year APE growth on the back of seven percent on year likely growth in March 2022 (four percent on year growth in January 2022 and nine percent on year growth in February 2022),” a report from the brokerage said.
Kotak expects the APE at Rs 3,068 crore for the quarter, on year growth of 6.5 percent and sequential growth of 18.1 percent.
“We expect marginal 30 basis point sequential (up 10 basis points on year) expansion in VNB margin to 27 percent led by likely strong sales on non-par savings and annuity-related products,” Kotak added in its report.
VNB is estimated at Rs 828.4 crore, jumping seven percent on year and 19.4 percent sequentially with VNB margins likely to stabilise year on year at 27 percent.
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