Analysts expect HDFC Life Insurance Co. Ltd.’s non-par policies and annuity products to witness growth, while they remain cautious over its protections plans amid uncertainties caused by the newer variants of the coronavirus.
Shares of HDFC Life fell as much as 1.23% to Rs 670.35 compared with benchmark Nifty 50 index's 0.7% drop. Of the 37 analysts tracking the stock, 26 have a 'buy' rating, nine recommend 'hold', while two have 'sell' rating, according to Bloomberg data. The consensus 12-month return target implies 15% upside from the current share price.
Here’s what brokerages have to say about HDFC Life Insurance’s first-quarter results...
Motilal Oswal
Recommends ‘neutral’ rating on the stock with a price target of Rs 725 apiece.
The company is focused on maintaining a balanced product mix across the business, with an emphasis on product innovation and superior customer service.
In the near term, the non-par/annuity and credit life segments are likely to see healthy growth.
It remains cautious on the individual protection business on claims-related uncertainty due to Covid-19.
Protection remains a long-term structural story, and the company would continue to leverage this opportunity prudently.
Prabhudas Lilladhar
Recommends ‘hold’ rating with a target price of Rs 725 apiece.
The company continues have a steady product mix.
Focus continues to remain on long-term products, while is cautious in near term on protection as profitable underwriting is quite tough.
With subsiding second wave, business has picked up and claims have moved down, although visibility of growth and Covid impact remains quite uncertain.
In the medium to long term, investment thesis continues to remain same on the back of improving protection/annuity and certain saving products.
This will enable gradual margin improvement and deliver 18% sustainable ROEV with 18-20% EV growth over FY22-FY24E.
Yes Securities
Recommends ‘add’ rating with a price target of Rs 769 apiece.
HDFC Life’s performance in Q1 FY22 was broadly in line with estimates.
Reserving of Rs 700 crore for Covid claims seems adequate currently.
The company has calibrated its approach towards protection business considering the risks associated with.
The focus is on non par and annuity products.
For the remainder of the year, the brokerage is working with a 13% APE growth and 16% VNB growth, which is fairly achievable.
During FY21‐24E, the brokerage expects APE CAGR of 14.4% and VNB CAGR of 17.8%.
Jefferies
Maintains ‘buy’ rating in its first-cut analysis with a target price of Rs 880 apiece.
HDFC Life reported a 40% YoY rise in VNB to Rs 4,100 crore, in line with estimates.
This was led by a healthy 30% growth in APE to Rs 1,560 crore, and 200 basis points YoY margin expansion to 26.2% (estimate 25.9%).
13th month persistency remained unchanged sequentially at 90% despite Covid.
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