HDFC Life eyes early-teens growth in FY26; high-margin products to offset GST impact

HDFC Life bets on protection, annuities, and high-margin unit-linked products to sustain growth

HDFC Life’s management reaffirmed its early-teens growth guidance for FY26, saying that the company remains on track despite macroeconomic and sectoral headwinds, as well as near-term regulatory cost pressures like GST.

“If you look at protection, it has grown at nearly three times the overall company pace. That has played a significant role in improving the margin profile,” said HDFC Life in post-results analyst concall, noting that annuities and high-charge unit-linked products are also contributing positively to profitability. About one-fourth of unit-linked business now carries higher charges, significantly enhancing margins for the category.

Management highlighted that disciplined pricing and favourable interest rate movements have further supported margins, even as the non-par mix declined slightly. “All these factors have got the product profile to improve, in spite of what appears to be a mix shift,” the management explained.

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Despite the GST-related cost headwinds, management expects non-par margins in the second half of FY26 to provide some cushion. “Higher non-par margins could help neutralise some of the GST drag. At the same time, growth from high-margin products will add incremental upside,” she said.

HDFC Life’s growth strategy remains focused on protection, annuities, and unit-linked offerings, with the insurer also selectively leveraging its HDFC Bank distribution channel. While growth in the banker channel is relatively flat year-on-year, the company continues to retain market share, with a two-year CAGR of 20 percent, reflecting disciplined expansion rather than volume chasing.

“Our focus is on improving margins while retaining share, rather than chasing volume indiscriminately,” HDFC Life added.

The company reported a 3 percent year-on-year rise in net profit to Rs 448 crore, while total premium income grew 15 percent to Rs 34,162 crore. New business premiums rose 12 percent to Rs 16,222 crore, and renewal premiums surged 18 percent to Rs 17,940 crore.

Individual Annualized Premium Equivalent (APE) increased 10 percent to Rs 6,471 crore, while Value of New Business (VNB) rose 10 percent to Rs 1,818 crore, maintaining a VNB margin of 24.5 percent.

Management also highlighted persistency as a strong anchor, with the 13-month ratio at 86 percent and 61-month persistency at 62 percent, reflecting customer stickiness and the quality of the underlying business.

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