HDFC Life Insurance Company Q3FY22 Preview: VNB seen at Rs7 billion, VNB margin at 27%

21 Jan 2022 , 08:13 AM

Result date: 21st January, 2022
Recommendation: Add
Target price: Rs. 770

HDFC Life’s new business premium is likely to increase by 34% YoY to Rs67.5 billion and renewal premium is seen at Rs52.6 billion, up 15% YoY. This will be driven by strong trends in Annuity and PAR segments. Total Annualized Premium Equivalent (APE) could come at Rs25.9 billion, registering a YoY increase of 20%. 

The company’s Value of New Business (VNB) could grow at a healthy pace of 22% on a YoY basis, driven by continued momentum in APE and 50 basis points margin expansion.

Important management insights to watch out for:

– COVID related claims
– Outlook on margins

Rs. Billion	December 2021 estimates	YoY change
New Business Premium	67.5	34%
Renewal premium	52.6	15%
Total APE	25.9	20%
Savings APE	22.4	20%
Protection APE	3.5	22%
VNB	7.0	22%
VNB Margin	27.0%	50 bps

Source: IIFL Research, Company