HDFC Life - Misses New Business Margin Guidance; Focus To Remain On VNB Growth For FY25E: DRChoksey

DRChoksey Research Report

In FY24, HDFC Life Insurance Company Ltd. reported a lacklustre result after a stellar FY23 due to tax changes, both in terms of annual premium equivalent growth and value of new business margin. The slowdown in the Non-Par segment resulted in a subdued growth in the APE.

However, HDFC Life is confident it will deliver an APE growth of ~15.0% by FY25E. Thus, as a strategy to offset the loss of high-ticket business, HDFC Life plans to continue focusing on tier-II and tier-III geographies, foster its lower ticket business, and strengthen its counter share at HDFC Bank.

The tier-II and tier-III markets have been seeing robust growth for HDFC Life, and the company is optimistic that the higher ticket-size products would likewise experience a revival in their contribution in the upcoming quarters, creating a positive topline growth trigger.

We are optimistic about the company's future prospects, as it is poised to benefit from various factors such as merger synergies, enhanced agency channel productivity, and strengthened banca partnerships.

These drivers are expected to contribute to the business growth in FY25E.

We have factored in 15.3% compound annual growth rate growth in net premiums, 9.9% in VNB, 20.1% in net profit and 17.5% in embedded value over FY23-26E.

Given its focus on delivering stronger growth in absolute VNB with preparedness to dilute VNB margins, we have lowered our margin expectations for FY25E and FY26E from 28.0% each to 26.5% and 26.8%, respectively.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.