Buy HDFC Life Insurance; target of Rs 820: KR Choksey

KR Choksey's research report on HDFC Life Insurance

In Q3FY25, the Gross Written Premium (GWP) amounted to INR 172,750 Mn, marking an 11.6% YoY growth (-4.2% QoQ). While the growth was broad-based, the GWP lagged our estimates by 4.8%, driven by weaker-than-expected growth in both firstyear premiums and renewals. The Value of the New Business (VNB) grew by 9.1% YoY (-0.2% QoQ), led by healthy growth in APE. VNB was 3.7% lower than our estimates. PAT for Q3FY25 was INR 4,149 Mn, a growth of 13.7% YoY/ (-4.2% QoQ). We lower our FY26E and FY27E EVPS by 2.9% and 3.4%, respectively, due to macro factors such as the potential impact of market volatility on ULIP demand, slower recovery in the credit life segment amid high NPAs, and the challenges posed by stricter regulatory norms.

Outlook

However, we maintain our BUY rating on the stock with a target price of INR 820 per share (INR 845) and assign a P/EV multiple of 2.3x (earlier 2.7x on FY26E) on FY27E EVPS of INR 356.9.