Add HDFC Life Insurance Ltd For Target Rs.630 - Yes Securities
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
VNB margin rises sequentially despite caution on retail protection
Result Highlights
* VNB margin: Calculated and comparable, ex-merger VNB margin expanded by 149bps QoQ and 170bps YoY to 28.3%
* VNB growth: Ex-merger VNB growth was 46.7%/10.3% QoQ/YoY, where the YoY growth was aided by improvement in VNB margin
* APE growth: Ex-merger new business APE growth was 38.9%3.7% QoQ/YoY, driven YoY by Non-par savings and Annuity business
* Expense control: Post-merger Expense ratio declined -65bps QoQ to 19.2% as opex ratio declined -179bps QoQ (numbers comparable sequentially)
* Persistency: Post-merger, 37th month ratio rose 580bps QoQ to 74% whereas 61st month ratio declined -20bps QoQ (numbers comparable sequentially)
Our view – VNB margin rises sequentially despite caution on retail protection
Calculated APE de-growth for the retail protection business has been -45% YoY and - 2% QoQ as HDFL remained cautious: Management stated that HDFL was cautious on customer profiles where the pricing and risk did not make sense to them. Total protection business was up 24% YoY on pre-merger basis. Protection was driven by credit life business, which was up 66% YoY in 1HFY23. Growth in credit life is on the back of strong disbursements at partners and repricing has also helped. Group term business has still not taken off as the company is still calibrating.
Margin expanded on sequential basis despite the caution on retail protection as NonPar Savings and Annuities picked up the slack: While the share of retail protection declined 248 bps QoQ, the share of Non-Par Savings and Annuities rose 586 bps and 239 bps QoQ, respectively. Also, product bucket margin has enhanced due to products such as Sanchay FMP. Management guided that the merged entity would be able to revert to unmerged entity’s FY22 margin (27.4%) by 3-4 quarters or sooner.
We maintain ‘ADD’ rating on HDFL with a revised price target of Rs 630: We value HDFL at 3.3x FY24 P/EV for an FY23E/24E/25E RoEV profile of 16.2/17.1%/17.2%.
To Read Complete Report & Disclaimer Click Here
Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632
Above views are of the author and not of the website kindly read disclaimer
