HDFC Life Q2 Results Review - Management Guides For Mid To High Teens New Business Growth: Yes Securities

Yes Securities Report

We maintain an ‘Add’ rating on HDFC Life Insurance Company Ltd. with an unchanged price target of Rs 815:

We value HDFC Life at 2.7x FY26 price/embedded value for an FY25E/26E/27E RoEV profile of 17.0%/17.2%/17.2%.

VNB margin – Leaving aside the impact from surrender charges regulation, management stated the margin will be range-bound:

The base case is that H2 FY25 margin will be slightly higher than H1 FY25. Despite the strength seen in ULIPs, slightly higher margin products are now expected to take center stage.

For the quarter, calculated VNB margin declined 74 bps QoQ to 24.3%. There was a negative impact on VNB margin amounting to 30-40 bps in H1 FY25 due to the deferment of repricing of non-par savings and annuity products.

As guided earlier, there would be a 100 bps impact on margin due to the surrender regulation if no action would be taken by the company. However, the company is re-negotiating with partners after the introduction of this regulation.

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