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Sailing smooth in the macros storm

We initiate coverage on the life insurance industry as we believe that the industry has growth potential to offer after undergoing multiple regulatory headwinds, shift of customer preference and changing macros. The industry continues to grow at a healthy pace driven by demand for the products, increasing financial literacy and the initiatives undertaken by the regulator to increase awareness regarding products.

We believe that the large private insurers are better placed than the public to capture the growth that the industry offers. We initiate coverage on 5 life insurance companies i.e, HDFC Life Insurance, ICICI Prudential, LIC of India, Max Financial Services and SBI Life Insurance. The investment rationale is as follows –

HDFC Life Insurance – The company aims to double its APE/VNB in every four years. It has maintained a healthy margin historically, and the company expects the margin to improve in the next FY. It is currently trading at P/EV multiple of 2.7/2.3/2.1x of its FY25/26/27E EV.

ICICI Prudential – IPRU is investing in products, channels and technology which shall result in healthy premium growth and lead to protection of margins. It is expected to grow higher than the industry which will lead to market share capture in both the individual and group business. It is currently trading at a P/EV multiple of 2.2/2.0/1.7x of its FY25/26/27E EV.

LIC of India - LIC continues to be a dominant insurer due to its footprint in the tier 2/3 regions and brand recall value. It is a dominant player in the group insurance business. It is currently trading at 0.7/0.7/0.6x P/EV over FY25/26/27E EV.

Max Financial Services – Max Financial continues to see healthy growth in its top-line which is mainly driven by the individual premium segment. Its product mix remains balanced with ULIPs, non-par savings and par savings having a majority portion of the product mix. is currently trading a P/EV multiple of 2.2/1.8/1.5x of its FY25/26/27E EV.

SBI Life Insurance - SBI Life is the market leader among private insurance companies. The company APE/VNB is growing at a healthy rate driven by growth in both individual and group segments. It is currently trading at a P/EV multiple of 2.5/2.1/1.8x over FY25/26/27E EV.

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