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We hosted the management of HDFC Life in Mumbai on 20-Nov-25, to discuss its performance, growth trajectory, and investor concerns. Vibha Padalkar (MD and CEO), Niraj Shah (CFO), and Kunal Jain (from IR) represented the company. Key highlights: 1) The GST ITC loss impact of ~300bps on VNB margin will be completely mitigated by FY26-exit through product-mix optimization, adjustments to distributor payout, product-design alterations, and cost optimization. 2) While increased affordability (led by GST rate exemption) has resulted in strong growth in the term protection segment, the management expects the supernormal growth to taper off, with rates settling at levels higher than the pre-GST 2.0 levels. 3) Productivity gains will drive growth in the agency channel; the management expects the channel to contribute ~25% of the retail business over the medium to long term. 4) With FY27 margin expected to reach FY25 level, the management is confident of returning to its stated objective of doubling APE-VNB-EV in every 4-4.5 years from FY27.

GST impact mitigation already underway The management mentioned that the ~300bps impact on VNB margin will be mitigated through product-mix optimization, negotiation with distributors, and improvement in cost-efficiencies. While competitors are in discussions with distributors to negotiate on all product lines and across renewal and new businesses, HDFC Life has negotiated with distributors to share (~50%) the impact of GST ITC loss on new business commissions in certain lines of business. Additionally, a shift in the product mix toward Non-Par and Protection products and improved persistency will aid VNB margin

Non-Par and Protection products’ contribution to increase in H2 product mix Term protection products saw strong growth of over 50% in recent months on account of GST rate cut. Although the mgmt expects exceptional growth to moderate, the segment is likely to surpass pre-GST 2.0 levels. With a shift toward Non-Par products, the management expects Non-Par and Protection products’ contribution to remain higher in the H2 product mix vs H1. The mgmt remains focused on growing the protection segment; however, the impact on the overall product mix will be gradual, given the lower ticket size of protection products vs savings products.

Investments in distribution to continue; agency remains the primary focus With HDFC Bank contributing ~48% of the APE, the mgmt expects to maintain the counter share near current levels of 65%, with focus on measures to improve profitability. With ~200 branches added in the last 3Y, the mgmt expects improved productivity to drive growth in the agency channel. Further, despite the GST ITC loss impact, the management continues to invest in distribution and technology; it expects agency contribution to inch up to ~25% of the retail business over the medium to long term.

Healthy growth and VNB margin outlook With the regulatory environment easing, the management expects to get back to doubling key metrics (APE, VNB, EV) over the next 4-4.5 years. Given the impact of GST ITC loss, VNB margin in FY26 will be lower than FY25 level. While investments will continue over FY27, the management expects VNB margins to expand from FY28

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