HDFC Life Insurance Company Ltd. share price target

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 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.

The Gross Written Premium (GWP) for Q4FY24 stood at INR 209,376 Mn, up 34.9% QoQ. However, GWP was 7.0% lower than our estimates due to lower-than-expected renewal premium growth.

Following a bumper FY23 in terms of APE growth and VNB margin on account
of taxation changes, HDFCLIFE reported muted performance in FY24 with a
largely flat APE at Rs 132.9bn and VNB declining 4.7% YoY to Rs35.0bn due to
130bps YoY VNB margin contraction to 26.3%.

HDFC Life reported an ~8% y-o-y decline in APE growth in Q4 on reported basis while adjusted for one off in the base period, it grew by 14% y-o-y. For FY24, APE growth was flat. Value of new business (VNB) fell by ~18% y-o-y/ 5% y-o-y in Q4FY24/ FY24.

HDFC Life Insurance (HDFCLIFE) in 4QFY24 reported lower-than-expected
margins at 26.1% with total APE at INR47.3b (broadly in line with
estimates).