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India's HDFC Life Insurance reported a near 15% rise in second-quarter profit on Tuesday, but a key margin declined, triggering the worst fall in its shares in nearly a month.

Demand for market- or unit-linked insurance plans (ULIPs) has been strong in recent quarters, driven by India's strong equity market.

However, a rise in sales of ULIPs, which have a lower profit margin, leads to the contraction of value of new business margins for insurers.

HDFC Life's VNB margin dropped to 24.6% for the half-year ended Sept. 30 from 26.2% a year earlier as the share of ULIPs in the product mix rose to 36% from 28%.

The insurer's profit rose 14.9% to 4.33 billion rupees ($51.5 million), driven by an around 12% rise in net premium income.

The insurer's value of new business, which is the expected profit from new policies, rose 17% year-on-year to 16.56 billion rupees in the quarter.

Annualised premium equivalent (APE) sales, a key metric that gives annualised total value of all single premium and recurring premium policies, rose 25% to 67.24 billion rupees for the three months.

The company's stock ended 3.6% lower after the results.

($1 = 84.0350 Indian rupees)