Choice Broking

HDFC Life (Hold)

Target: ₹759

CMP: ₹705.90

HDFC Life Insurance is one of India’s leading private life insurers. The company began operations in 2000 as a JV between HDFC and Standard Life Aberdeen.

As of FY20, it has managed to gain around 17 per cent overall market share among private life insurers. In Q3FY21, HDFC Life continued its consistent performance.

New business premium (NBP) came in at ₹5,051 crore, up by 19 per cent y-o-y. However, sequentially it declined by 14 per cent led by a reduction in single premium policies. APE remained largely flat at ₹2,160 crore. Value of new business grew 4 per cent q-o-q and 27 per cent y-o-y to reach ₹570 crore, with VNB margin expanding to 26.4 per cent.

Embedded value (EV) was at ₹25,050 crore in 9MFY21, recording a growth of 21 per cent from FY20. Return on embedded value (RoEV) recovered close to the pre-pandemic levels to reach 18.3%. Expense ratios saw marginal expansion as operations returned to normal after the Covid-19 lock-down; operating and commission expense ratios grew to 12.1 per cent and 4.3 per cent, respectively.

However, they are still below pre-pandemic levels of 13.1 per cent and 4.6 per cent. Solvency ratio remains strong at 202 per cent and AUM stood at ₹1,65,600 crore, up 30 per cent from March 2020