HDFC Life climbs 5% to hit 52-week high after Q1 show; brokerages raise target

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26 Aug, 2025 12:21

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Shares of HDFC Life Insurance Company rallied nearly 5 percent intraday to hit 52-week high of Rs 532.90 on July 24. Global brokerage houses raised price target sharply after stellar earnings performance in Q1.

At 0925 hours IST, the stock was quoting at Rs 526.50, up Rs 17.90, or 3.52 percent on the BSE.

HDFC Life reported 11.7 percent year-on-year growth in profit at Rs 424.62 crore, driven by growth in new business premiums.

New business margins jumped to 29.8 percent in Q1FY20, compared to 24.2 percent a year ago. The 13th-month persistency also rose to 88.8 percent in Q1FY20 from 85 percent in the year-ago period.

Global brokerage house Citi upgraded its rating on HDFC Life to buy from sell and also raised target price to Rs 600 from Rs 390, as value of new business (VNB) delivery was much ahead of expectations in Q1.

Stock can still do well on the back of VNB CAGR Of 39 percent over FY19-21, the investment firm said, adding HDFC Life expects product mix to get more balanced with growth in par & ULIP improving.

Company's individual annualised premium equivalent (APE) increased 64 percent YoY and new business premium jumped 47 percent in the June quarter.

There was a stark change in HDFC Life's product mix in the June quarter. Unit-linked products mix dropped to 26 percent of individual APE in Q1 compared to 54 percent a year ago. On the other hand, the share of non-par savings rose to 63 percent in Q1FY20 from 11 percent in Q1FY19.

"We have recorded stellar topline growth, with strong traction witnessed across savings, protection and retirement solutions whilst maintaining our focus on profitability. Our diversified distribution mix coupled with product innovation has helped us address niche customer segments and emerging profit pools," Vibha Padalkar, MD & CEO said.

The company has stepped up efforts within the protection and retirement space, which she expects would fuel growth across market cycles, he added.

Another global research firm CLSA also maintained buy call on the stock and upped target price to Rs 610 from Rs 490 per share earlier as it sees margin of 27 percent and return on embedded value (RoEV) of 20 percent over FY19-22.

HDFC Life's operating return on embedded value (EV) stood at 19.9 percent in Q1 compared to 18.4 percent a year ago. Operating Return on EV is the ratio of EVOP (Embedded Value Operating Profit) for any given period to the EV at the beginning of that period.

Disclaimer: The views and investment tips expressed by brokerages on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.