MARKETS

HDFC Life Insurance Share Sinks on Subdued Q4 Profit Growth

HDFC Life PAT grew 13% in FY23 with a private sector market share of 17%.

On April 27, HDFC Life Insurance Company’s shares edged lower in early trade, a day after the life insurer conveyed an essentially unchanged net profit of Rs 359 crore for Q4. For comparison, the net profit was at Rs 357 crore in the same quarter of FY22.

At 11:30 am, HDFC Life’s shares were trading with a cut of 2.65% at Rs 517.50 on the NSE.

Sequentially, net profit was up 14% from Rs 315 crore in the October-December quarter of FY2022-23. For FY23, net profit grew 13% to Rs 1,360 crore.

HDFC Life’s net premium income was also augmented by 36% to Rs 19,426 crore, related to Rs 14,290 crore in the last year. The company’s first-year premium income rose by 73% to Rs 4,467 crore during the reporting period.

The value of the new business (VNB) increased by 69% YoY, with margins expanding 240 bps QoQ to 29.3%. The embedded value (EV) grew 5% QoQ to Rs 39,500 crore.

Global research firm Morgan Stanley has given an “overweight” rating to HDFC Life, raising the target to Rs 700 a share. HDFC Life’s growth DNA and execution were underscored in Q4. HDFC Bank’s stake upsurge to 50% will remove a technical overhang and should result in structural business gains.

Jefferies has a “buy” rating with a target price of Rs 670. HDFC Life’s 68% rise in the value of the new business was marginally ahead of its estimates and helped by better margins.

Motilal Oswal Financial Services has reserved its “neutral” rating on HDFC Life with a target price of the stock at Rs 610 per share. It focused on sustaining a balanced product mix, emphasising product innovation and customer care.

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