Buy HDFC Life Insurance Co; target of Rs 706: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on HDFC Life Insurance Co

The Gross written premium for Q2FY23 stood at INR 1,32,826 Mn, healthy growth of 32.2% QoQ/ 14.2% YoY led by strong growth in the renewal premium. The New Business Premium (NBP) for the quarter grew by 28.8% YoY, while renewal premium grew 35.4% QoQ (37.2% YoY). New business margin (NBM) expanded by 171 bps YoY (149 bps QoQ) at 28.3% in Q2FY23 on a profitable product mix and merger impact. The value of the new business increased to INR 7,480 Mn, registering a QoQ growth of 46.7% (10.3% YoY) in Q2FY23. PAT for Q2FY23 was at INR 3,262 Mn, a growth of 19.0% vs Q2FY22. Solvency ratio as of September 30, 2022, stood at 210%. AUM as of September 30, 2022, stood at 20,43,920 Bn, a growth of 6.9% YoY (2.1% QoQ). The embedded value of the merged entity is INR 360.16 Bn.

Outlook

We assign a 3.25x P/EV on FY24E EVPS of INR 227.0, a VNB multiple of 23x to HDFC Life, and arrive at the weighted average Target Price at INR 706 per share (unchanged) (50:50 weights on the P/EV and appraisal value methodology), implying a 32.2% upside potential over CMP. We have maintained our 'BUY' rating on HDFC Life Insurance Co. Ltd.

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HDFC Life Insurance Co - 271022 - kr