What should investors do with HDFC Life after Q4 numbers: buy, sell or hold?

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26 Aug, 2025 12:21

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HDFC Life Insurance share price fell 1 percent in the early trade on April 27 , a day after the company posted a 2.3 percent year-on-year (YoY) rise in its March quarter consolidated net profit at Rs 319.06 crore.

During the quarter, the life insurer collected new premiums of Rs 434.47 crore as against Rs 298.40 crore in the year-ago period. HDFC Life sold about 9.8 lakh new individual policies in the quarter, registering a YoY growth of 10 percent in FY21.

The overall growth will be ahead of the industry due to a well-diversified book, while margin may have peaked. The pace of value of new business (VNB) growth will slow to 15 percent CAGR over FY21-23.

Annual Premium Equivalent (APE) market share gains continued, while VNB margin expanded further and persistency improved.

The management cited cautious optimism given the second COVID-19 wave. Raised VNB and EV estimates by 4 percent and 3 percent For FY22-23

CLSA expects FY21-23 APE CAGR of 17 percent and the long-term VNB margin of 30 percent and expects the company to deliver a 19 percent VNB CAGR over FY21-23.

The valuations are not cheap, but it remains a steady compounder.

The company remains focused on maintaining a balanced product mix, with an emphasis on product innovation and superior customer service.

However, in the near term, the non-PAR and PAR segments are likely to see healthy growth, while ULIP also continues to recover. However, we remain watchful of the impact of lockdown announced in various key states due to a resurgence in COVID-19 cases.

The company has been able to steady its product mix to drive linear growth and continue the focus on protection, annuity and retirement products as long- term propositions, which should lead to steady improvement in growth and margins ahead. We largely retain our estimates for FY22/23E with 18 percent EV growth and 15-16 percent APE growth.

We think the valuations are reasonable, backed by factors such as HLIC having a well-diversified product bouquet (no segment contributing to more than 30 percent of the APE), best-in-class branding, and strong metrics.

We believe the company is well placed to deliver strong and sustainable long-term APE growth. Aided by strong fundamentals (robust balance sheet and consistent profitability) and high long-term growth potential for the Indian insurance industry in general and HDFC Life, in particular, we find HLIC an attractive long-term bet.

At 0937 hours, HDFC Life Insurance Company Limited was quoting at Rs 697.60, down Rs 7.15, or 1.01 percent on the BSE.

The share touched a 52-week high of Rs 746 on March 9, 2021 and a 52-week low of Rs 451.25 on April 24, 2020. It is trading 6.49 percent below its 52-week high and 54.59 percent above its 52-week low.