Neutral HDFC Life Insurance; target of Rs 700: Motilal Oswal

Motilal Oswal's research report on HDFC Life Insurance

HDFC Life Insurance (HDFCLIFE) reported a mixed performance in 1QFY24. It posted a 6% miss on VNB and 160bp miss on VNB margins. APE rose 13% YoY to INR23.3b (in-line) driven by ULIP, Annuity and Term products. On a total APE basis, non-PAR too rose 9% YoY. VNB increased 18% YoY (6% miss) with margin expanding 110bp YoY to 26.2%. EV grew 6% QoQ to INR418b during the quarter. PAT at INR 4.2b was in line with our estimates and rose 15% YoY in 1QFY24.

Outlook

We estimate HDFCLIFE to deliver ~18% VNB CAGR over FY23-25 and its margin to improve to ~28.5% by FY25. Reiterate Neutral with a TP of INR700 (premised on 2.7x Mar’25E EV).