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Motilal Oswal Report
HDFC Life Insurance Company Ltd. in Q3 FY24 reported lower-than-expected performance with total annual premium equivalent at Rs 31.9 billion (missed our estimates by 7.3%).
Total APE declined marginally by 2% YoY to Rs 31.9 billion as non PAR/annuity/term products declined 35%/45%/16% YoY, offset by 74%/96% surge in unit linked insurance plans/group products.
VNB margins, at 26.8%, fell 70 basis points below expectations (missing estimates by 9.6%). Nevertheless, embedded value grew 20% YoY to Rs452 billion.
Q3 FY24 profit after tax at Rs 3.6 billion was broadly in line with estimates and saw a 16% YoY growth.
For nine monthsFY24, APE/value of new business/profit after tax grew 5%/5%/16% to Rs 86 billion/22.6 billion/11.5 billion.
We estimate HDFC Life to deliver ~15% VNB compound annual growth rate over FY23-26 and margin to improve to ~29.4% by FY26E.
We retain our 'Neutral' stance on the stock with a target price of Rs 700 (premised on 2.6 times Sep-25E embedded value).
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