HDFC Life Insurance is expected to report an annualised premium equivalent (APE) of Rs 3,201 crore for the quarter ended September, growing 12.3 percent year-on-year, later on October 13.
APE is essentially a measure of sales for a life insurer. HDFC Life's net profit is pegged at Rs 370 crore, up 14.3 percent YoY, according to the average estimate of three brokers. Its value of new business (VNB), a crucial profitability metric, is likely to grow 14.5 percent YoY to Rs 882 crore.
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The VNB margin is expected to come in at 26.85 percent, a slight dip of 15 basis points from 27 percent in Q2 FY23.
Analysts at Kotak Institutional Equities expect a good pick-up in lower-ticket non-par and annuity policies. In non-participating policies, the profits are not shared and no dividends are paid to policyholders. While these are high-margin products, HDFC Life's margin will largely remain stable as Exide Life's low-margin products are still catching up in the portfolio.
"Credit life to see healthy traction as disbursement momentum across lending institutions remains strong. Improvement in persistency ratio and commentary on growth outlook are key monitorables," Motilal Oswal Financial Services said.
In the Union Budget 2023, Finance Minister Nirmala Sitharaman had announced that income from traditional insurance policies where the premium was over Rs 5 lakh would no more be exempt from taxes.
Following this, HDFC Life and several other insurance stocks took a knock. However, it got a boost after the HDFC Bank-HDFC merged entity was given the approval to hold over 50 percent in the company.
HDFC Life has rallied over 40 percent from its March low. At 10:30am, the stock was quoting Rs 629.20 on the NSE, up 0.73 percent from previous close.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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