IGI Logo

Steady growth; outlook on growth optimistic…

About the stock: HDFC Life is among the most dominant players in the Indian life insurance industry with a strong distribution network, parentage, operating metrics.

* Balanced product mix with focus on non-par and protection business

* Industry leading VNB margins of over 25%

Q2FY22 Results: Business traction healthy, elevated claims impact earnings.

* Gross premium grew at a healthy pace of 14% YoY to | 11632 crore

* VNB margins remained healthy at 26.4%, aided by a balanced product mix

* Claims remained elevated amid pandemic; provision buffer at | 204 crore

* Surplus improved from | 59 crore to | 178 crore QoQ

What should investors do? HDFC Life’s share price has grown by ~2x over the past four years.

* We retain our BUY rating on the stock

Target Price and Valuation: We value HDFC Life at 4.4x FY23E EV with TP of | 850

Key triggers for future price performance:

* Focus on credit protect & retirement product to aid business growth

* Strong distribution network remains core to maintain business momentum

* VNB margins to be industry leading at ~26%, led by balanced product mix

* Approval from IRDA, CCI for merger of Exide Life expected in Q4FY22

Alternate Stock Idea: Apart from HDFC Life, in our coverage we also like SBI Life

* SBI Life also comes with a strong parentage with strong distribution network and superior cost efficiencies

* BUY with a target price of | 1,250

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Above views are of the author and not of the website kindly read disclaimer