Emkay Global Financial's research report on HDFC Life Insurance
HDFC Life reported a satisfactory performance in 9M/Q3FY23, with headline numbers coming in line with our expectations. The integration of Exide Life post the merger and synergy accretion is progressing well and management reiterated its guidance of FY23 VNB margin of the merged entity to be at par with pre-merger VNB margin of HDFC Life. On the product side, credit life maintained its strong run with +52% YoY growth, while retail protection appears to be turning the corner with 13% QoQ growth in Q3FY23. On the distribution front, banca and agency both contributed to the company’s robust growth. Considering Exide Life’s existing cost structure and increased cost in customer acquisition in open architecture, banca channels have resulted in a slightly elevated cost structure for the company. Overall, 9MFY23 developments at HDFC Life come on anticipated lines and, with the Exide Life merger behind, the company is on track to deliver profitable growth.
Outlook
However, besides HDFC Life’s operating performance, the merger process and modalities of the HDFC-HDFC Bank merger are likely to be the key drivers for HDFC Life’s shares in the near term. To reflect 9MFY23 developments, we have marginally tweaked our estimates and reiterate our Buy rating with an unchanged TP of Rs700/share.
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