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Prabhudas Lilladher Report
HDFC Life Insurance Co. is making a second attempt at an inorganic deal with acquisition of Exide Life Insurance Co. for Rs 6,687 crore valuing the company at 2.5 times current enterprise value.
The rationale for the deal has been-
strong agency business (adds 40% to agency top line),
better protection (mix of 11% for Exide) and
presence in southern tier-II and III locations.
In our view, Exide Life's acquisition has minimal compliments to HDFC Life given a smaller size, it has been losing market share and immediate margins and operating expenses synergies are on lower side which will be have to be worked upon, compared to 2.5 times multiple to current enterprise value.
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