Buy HDFC Life Insurance; target of Rs 720: Sharekhan

Sharekhan's research report on HDFC Life Insurance

HDFC Life reported 26% y-o-y increase in VNB. VNB margins (merged) reported at 26.8% in Q3FY2023 with 26.2% in H1FY23 and 26.5% in 9MFY23. VNB margins are expected to remain flat for FY23E in line with earlier guidance. The company reported 26% y-o-y APE growth on a merged basis led by strong growth in non-PAR savings segment, annuity, group protection segment. Share of non-PAR savings increased to 35.1% of overall APE in Q3FY2023 from 32.5% in Q2FY23 and 28.6% in Q3FY22. Share of ULIPs fell to ~17.5% in Q3FY2023 from 18.3% in Q2FY23 and 21.5% in Q3FY22. Individual protection was down by 7% y-o-y. Group protection was up by 40% y-o-y and credit protect was up by 52% y-o-y.

Outlook

Stock currently trades at 3.2x/2.7x/ 2.3x its FY2023E/FY2024E/ FY2025E EVPS. We maintain a Buy on the stock with a revised PT of Rs. 720.

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HDFC Life Insurance - 30 -01-2023 - khan