HDFC Life Q1 Results Review - APE Up 23% YoY, New Business Margins 100 Bps Below Estimate: Motilal Oswal

Motilal Oswal Report

HDFC Life Insurance Company Ltd. in Q1 FY25 reported lower-than-expected value of new business margins at 25% (estimate: 26%), with absolute VNB increasing 18% YoY to Rs 7.2 billion (inline with estimate). 

Total APE grew 23% YoY to Rs 28.7 billion (4% higher than estimates) in Q1 FY25 as unit linked insurance plan/non-par grew 88%/37% YoY.

Embedded value grew 19% YoY to Rs 496 billion, while solvency was at 186% versus 200% in Q1 FY24. The company has received approval to raise Rs 20 billion via sub-debt, which will improve solvency.

Q1 profit after tax at Rs 4.8 billion grew 15% YoY but was 8% below our estimate.

We have raised our APE growth estimates but lowered our VNB margin assumptions based on Q1 performance and the guidance. We now estimate HDFC Life to deliver an ~18% VNB CAGR over FY24-26 and steady margin in the range of 25-26%.

Maintain Buy with a target price of Rs 750 (premised on 2.5 times March-26E EV).

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.