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Abrdn Sells 1.6% Stake, Exits HDFC Life Insurance

HDFC Life shares rose 3% after Abrdn made the big deal.

On May 31, about 3.6 crore shares, or a 1.6% stake, of HDFC Life Insurance changed hands during the block trade window. While it is unclear who the buyer will be, earlier reports suggested that Abrdn (formerly Standard Life) may sell all its shares and exit the company.

The private insurer is offering shares at Rs 563-585, according to terms obtained by Bloomberg. The stock opened higher after the deal was quoted at Rs 590.05, with more than 32 lakh shares traded at 9:30 am.

Notably, shares of HDFC Life jumped 15% after the Reserve Bank of India (RBI) on April 21 allowed HDFC Bank or HDFC Ltd to increase its stake in HDFC Life to more than 50%. HDFC Ltd holds a 48.65% stake in HDFC Life as of March 2023.

The stock suffered aftershocks from the union’s budget proposals to tax policy gains on premiums above Rs 5 lakh and introduce a new tax regime that scrapped almost all exemptions.

Analysts say the company is now investing in developing lower-priced policies to offset a slowdown in higher-priced non-par business.

For the fourth quarter, HDFC Life reported a nearly flat net profit of Rs 359 crore compared to Rs 357 crore last year, despite a 36% rise in net premiums to Rs 19,426 crore. The company has an EV of Rs 39,527 crore as on March 31, 2023, with an operating ROE of 19.7% for FY23.

The stock currently has 24 buy calls, 3 hold calls and 4 sell calls. The stock has a 12-month consensus target of Rs 638, representing an 8% upside from current levels.

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