KR Choksey's research report on HDFC Life Insurance Co
The Gross written premium for Q3FY23 stood at INR 1,45,750 Mn, healthy growth of 18.9% YoY/ 9.7% QoQ led by strong growth of 29.7% YoY in the renewal premium. The New Business Premium for the quarter grew by 10.1% YoY/ 15.9% QoQ driven by 28.8% YoY/ 12.5% QoQ in First-Year Premium segment. The single premium segment grew by 1.5% YoY in Q3FY23. New business margin (NBM) expanded by 74 bps QoQ (-8 bps YoY) at 26.7% in Q2FY23 for the merged entity. The value of the new business increased to INR 8,700 Mn, registering a QoQ growth of 11.5% (25.4% YoY) in Q3FY23. PAT for Q3FY23 was at INR 3,152 Mn, a growth of 15.2% vs Q3FY22. Solvency ratio as of September 30, 2022, stood at 209%. AUM as of December 31, 2022, stood at INR 23,38,390 Mn, a growth of 20.1% YoY (14.4% QoQ). The embedded value of the merged entity is INR 377.02 Bn as of December 31, 2022.
We assign a 3.3x P/EV on FY24E EVPS of INR 227.0, a VNB multiple of 18x to HDFC Life, and arrive at the weighted average Target Price at INR 735 per share (Earlier INR 706) (50:50 weights on the P/EV and appraisal value methodology), implying a 24.9% upside potential over CMP. We have maintained our 'BUY' rating on HDFC Life Insurance Co. Ltd.