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Motilal Oswal Report
HDFC Life Insurance Company Ltd. has corrected 20% in the past five months, while all other private listed players have been range-bound. We note that the de-rating of the stock has been steeper after the announcement of the exposure draft on surrender charges and more recently when media reports about the same.
The key reason for HDFC Life's premium to other players has been its ability to weather adverse regulations relatively better than other players through its product innovation and a strong distribution network.
In terms of valuations, the one-year forward price/embedded value of HDFC Life at 2.2 times has been the lowest since January 2023.
We believe the company will wade through these changes positively. Over FY24-26, we expect HDFC Life to report a CAGR of 15.2/16% in APE/VNB. We upgrade our rating to Buy with a one year price target of Rs 700.
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