HDFC Life Insurance Company Ltd. share price target

Value of New business (VNB), a key metric for measuring profitability of new business written in a period, grew 57.0% YoY in H1FY20 to Rs. 957cr while VNB margin grew 320bps YoY to 27.5% in the same period. PAT rose 7.6% YoY to Rs. 309cr in Q2FY20, while embedded value (sum...

In Q1FY20, gross premium income rose 29.2% YoY driven by 46.6% YoY growth in new business premium. Value of New business (VNB), which is the profitability of new business underwritten in the period, more than doubled YoY to Rs. 509cr with VNB margin (VNB as a % of amount of new business) growing to 29.8%. PAT rose 11.7% YoY to Rs. 425cr, while embedded value (sum of current net worth and PV of future profits) grew 22.6% YoY to Rs. 19,230cr. Although the company reported strong growth in both premium and...

HDFCLIFE reported strong ~29% YoY growth in net premium income, led by a 47% YoY increase in new business premium. Shareholder earnings increased 12% YoY to INR4.3b, which is 4% below our estimate due to higher new business strain, though back-book surplus increased 27% YoY. increased 64% YoY, led by term/annuity APE growth of 63%/69% YoY. The share of the non-par savings business in individual APE increased sharply to 63% from 11% last year due to the success of the Sanchay Plus product. Renewal premium growth moderated to 10% YoY (v/s 17% YoY in FY19), though the persistency ratio improved across both the 13M/61M cohorts. HDFCLIFE made additional disclosure highlighting that, in the non- par business, while the VNB margin is not sensitive to the interest rate, the impact on EV in case of a 100bp decline in interest rate will be only 0.5%.

HDFCLIFE delivered a stable performance in 3QFY19, with shareholder weighted premium grew 27% YoY (11% YoY in APE terms), led by ~64% growth in single premium. In 9MFY19, the share of protection business increased to 16.6% in total APE, while it stood at 28.1% in un-weighted new business premium. New business margins stood at 24% (24.3% for 1HFY19), driving 25% YoY growth in VNB. Renewal premium growth stood at 18% YoY (22% YoY in 2QFY19), as 13 month individual persistency declined marginally to 82% (from 83% in 1HFY19). The share of ULIPs in individual APE stood stable at 59%, while the composition of non-par savings business increased sharply to 14% (11% in 1HFY19), aided by sharp growth in annuity business (4x growth in 9MFY19). This reflects higher growth in the single premium business, the share of which has increased from 28% in 9MFY18 to ~36% in 9MFY19.

HDFC Life's overall APE grew by 15.5% YoY on slower individual APE growth of 11.0% but individual product mix break-up mix showcases continued growth in protection and non-par savings mainly the annuity product which are both margin accretive and hence VNB continued to showcase strong growth of +20%. Overall VNB margins were marginally weak (150bps on Q3FY19 implied) as bank invests in new business partnerships and hence pick-up in margins are lagged and should start adding ahead, while partnerships have been towards co-operative banks incrementally, previous...

HDFCLIFE delivered a steady quarter, with total un-weighted premium growing 30% YoY (+13% YoY in APE terms). PAT grew 20% YoY to INR2.8b (4% miss). The share of protection business increased to 16.2% in total APE, while it stood at 28.7% in un-weighted new business premium. New business margins stood at 24.3% (22.4% for 1HFY18), leading to 28% YoY growth in VNB. Renewal premium growth recovered further to 22% YoY (16% YoY in 1QFY19, 13% YoY in FY18). The share of ULIPs in individual new business APE rose to 59% from 57% in FY18, while the composition of non-par savings and protection business also increased. HDFCLIFE continues to see significant potential in the protection business and aims to improve the product mix, which should further support profitability. Opex stood at 14.1% of total premiums (14.2% in 1HFY18; 14.

Value of new business (VNB) margin expanded by 10bps qoq to 24.3% (vs. our est. of 24.7%), led by higher share of protection business at 14.8% in 2Q19 (16.2% in 1H19), partially offset by increasing share of ULIPs and lower share of Par products in individual annualized premium equivalent (APE)....

23 July 2018 HDFC Life (HDFCLIFE) delivered a steady quarter, with total premium increasing 37% YoY (62% YoY growth in NBP). Premium growth (APE terms) remained strong, with individual APE growing 15% YoY and overall APE increasing 26% YoY. The share of protection business in total APE improved further to 18% (32% in un-weighted NBP). The share of protection business in individual APE also increased sharply to 8% v/s 5% last year. This enabled 100bp QoQ expansion in new business margin to 24.2% and drove 43% YoY growth in VNB to INR2.5b. Renewal premium growth also recovered to 16% YoY (13% YoY in FY18). The share of ULIPs in individual new business APE moderated to 54% from 57% in FY18, while the composition of non-par savings and protection business increased. HDFCLIFE continues to see significant potential in the protection business and aims to improve the product mix, which should further support profitability.