HDFC Life Insurance Company Ltd. share price target

A frontrunner in a growing industry

HDFC Life continues guide for 18-20% APE growth and >15% VNB growth in the next couple of quarters. APE growth remained healthy at 20% y-o-y while VNB grew by 14% y-o-y in 9MFY25.

In Q3FY25, the Gross Written Premium (GWP) amounted to INR 172,750 Mn, marking an 11.6% YoY growth (-4.2% QoQ). While the growth was broad-based, the GWP lagged our estimates by 4.8%, driven by weaker-than-expected growth in both first-year premiums and renewals.

HDFCLIFE reported stronger-than-expected APE growth of 20%/12% YoY in 9MFY25/Q3FY25

HDFCLIFE reported an impressive performance in 9MFY25, with APE 1.6% above our estimate at Rs102.9bn, and VNB margin at 25.1% above our estimate of 24.5% resulting in a 4.2% beat on VNB at Rs25.9bn.

In Q2FY25, the Gross Written Premium (GWP) amounted to INR 169,275 Mn (+13.3% YoY). The GWP fell short of our estimates due to lower-than-anticipated renewal premium growth.

HDFCLIFE reported broadly in-line numbers for H1FY25, with APE 3.6% above our estimate at Rs67.2bn however, VNB Margin at 24.6% missed our estimate of 25.1% resulting in largely in-line VNB at Rs16.6bn.

VNB margins lagged estimates, fell by ~200 bps y-o-y reported at 24.3% vs estimates of 25.4% due to adverse product mix and repricing of IRR downwards for some of the existing non-par savings & annuity products (one off item).

We maintain a Buy on HDFC Life with a revised PT of Rs.870. The company is confident of growing
retail APE higher than industry APE and doubling VNB every four years.

The Gross Written Premium (GWP) for Q1FY25 stood at INR 128,109 Mn, a growth of 9.7% YoY, primarily led by the renewal segment. On a QoQ basis, the GWP declined by 38.8% on account of a high base of Q4FY24.

HDFC Life (HDFCLI) reported 18% growth in VNB YoY despite 113bps reduction in VNB margin to 25.1% in Q1FY25. This, along with strong 39% growth in non-par, 31% growth in individual protection and 22% growth in number of policies underline HDFCLI’s execution efforts as it aims to clock 18–20% VNB CAGR.

HDFC Life Insurance (HDFCLIFE) in 1QFY25 reported lower-than-expected
VNB margins at 25% (est. 26%), with absolute VNB increasing 18% YoY to
INR7.2b (in line with estimate).

HDFCLIFE reported broadly in-line results for Q1FY25, with APE at Rs28.6bn
(+23% YoY), coming in 4% above our estimates and more than offsetting the
slight margin miss at 25% (Emkay est.: 25.6%), leading to a ~2% beat in VNB
at Rs7.18bn (Emkay: Rs7bn).

HDFC Life reported broadly in-line performance, except VNB margins lagged estimates. APE grew by 23% y-o-y mainly driven by higher ULIP sales (up 99% y-o-y).

HDFC Life (HDFCLI) has successfully worked its way to improve bancassurance as well as agency while focusing on SURU markets (semi-urban and rural) in FY24. This has led to 13% YoY growth in tier 2/3 locations while overall NoP has grown 11% YoY in FY24.