Buy HDFC Life Insurance; target of Rs 910: Motilal Oswal

Motilal Oswal's research report on HDFC Life Insurance

HDFC Life Insurance (HDFCLIFE) reported APE of INR32.3b (in-line) in 1QFY26, up 13% YoY, driven by 13%/12% YoY growth in individual/group APE. VNB grew 13% YoY to INR8.1b in 1QFY26 (5% below our estimates). Margins stood at 25.1%, a 90bp decline from our estimate of 26%, primarily due to the shift in the product mix towards lower yield offerings. For 1QFY26, HDFCLIFE reported a 14% YoY growth in shareholders’ PAT to INR 5.5b, (11% beat), supported by a 15% increase in back-book profits. VNB margins are expected to remain range-bound due to slower growth and the reinvestment of surplus into distribution expansion and fixed cost absorption.

Outlook

We trim VNB margin assumptions by 50bp each for FY26/FY27, factoring in 1QFY26 performance and guidance of flattish margins. We reiterate BUY with a TP of INR 910 (2.6x FY27E EV).

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