HDFC Life Q1- Well Placed To Benefit From Improving Outlook Of Volume Growth, Margin Balance: ICICI Securities

ICICI Securities Report

HDFC Life Insurance Company Ltd. reported 18% growth in value of new business YoY despite 113 basis points reduction in VNB margin to 25.1% in Q1 FY25. This, along with strong 39% growth in non-par, 31% growth in individual protection and 22% growth in number of policies underline HDFC Life’s execution efforts as it aims to clock 18–20% VNB CAGR.

The higher surrender value regulations should have limited impact of ~100 bps on VNB (helped by conservative zero-surrender assumption from year two, restructuring of distribution payouts and competitive pricing).

Increasing counter share in HDFC Bank (from 56.5% in Q1 FY24 to 66% in Q1 FY25) and increasing product-level margin with riders and embedded protection remain strong growth levers.

Maintain Buy.

Risks: Overall weakness in volume growth and adverse regulations.

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