Emkay Global Financial's report on HDFC Life
HDFC Life (HDFCSL) reported VNB margins of 26.2% (+180bps yoy) in Q1FY22. The share of individual protection products declined ~4% yoy as the share of ULIPs rose in overall AUM. The company witnessed disruption in business activities in May’21; however, other products like annuity and credit life performed well. HDFCSL saw a steep rise in death claims, with peak claims in the second Covid wave at ~3-4 times of peak claims in the first wave. The company cleared ~70,000 claims in Q1, with gross/net claims amounting to Rs16bn/Rs9.6bn. The company has created an additional reserve of ~Rs7bn; however, near-term uncertainties persist.
We roll forward our TP to Sep’22E and maintain Buy (OW in EAP) with a revised TP of Rs870 (Rs848 previously), corresponding to 4.5x P/Sep’23E EV.
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