Buy HDFC Life Insurance Co; target of Rs 745: KR Choksey

KR Choksey's research report on HDFC Life Insurance Co

The Gross Written Premium (GWP) for Q4FY24 stood at INR 209,376 Mn, up 34.9% QoQ. However, GWP was 7.0% lower than our estimates due to lower-thanexpected renewal premium growth. The Value of the New Business (VNB) declined by 18.3% YoY but grew by 44.2% QoQ to INR 12,340 Mn. VNB was 3.9% lower than our estimates. PAT for Q4FY24 was INR 4,197 Mn, a growth of 17.0% YoY/ 15.0% QoQ. The earnings were in line with our estimates. The embedded value (EV) of HCFCLIFE was INR 474.7 Bn as of March 31, 2024, an increase of 20.1% YoY and 5.3% QoQ. The Board has proposed a final dividend of INR 2.0 per share for FY24.

Outlook

We have cut our VNB margin estimates for FY25E/ FY26E by ~150 bps considering the guidance of the Company to maintain its VNB margins at FY24 levels and given the increasing traction in lower margin segments like ULIPs. We maintain our BUY rating on the stock with a target price of INR 745 per share, assigning a multiple of 2.5x (unchanged).