2QFY26 APE growth was mild at 9% YoY; however, uptick in retail protection post GST rationalization is a key positive. Sustained momentum in ULIP and PAR, pick-up in credit life and recovery in NPAR is likely to result in a better run-rate in H2FY26E at 12% YoY and we build an overall APE growth of 14.5%/ 14.8% for FY26/ FY27E. 2QFY26 VNB margin contracted to 24.1% (H1FY26 VNB Margin at 24.5%) due to the impact of GST exemption. We expect FY26E margin to trend lower at 24%; however strong growth in retail protection volume and improved margin profile in ULIP is likely to offset some of the drag. While we have trimmed our VNB margin estimates for FY26/FY27E, we remain confident of delivery on growth.
OutlookWe value HDFC Life using the Appraisal Value framework and maintain BUY with a TP of Rs 900 (2.6x FY27E P/EV).
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