Q1FY24 Preview: HDFC Life Insurance Company: New business premium seen at Rs. 59.9 billion, VNB margin at 28.0%

18 Jul 2023 , 12:26 PM

Result date: 21^st July, 2023

Recommendation: Add

Target price: Rs 700

HDFC Life Insurance Company (HDFC Life) could post healthy performance for the quarter under review. The company’s balanced product mix will continue to help navigate the business cycle, believe analysts at IIFL Capital Services.

The company’s stock price has surged 45% since the budget day lows when proposed taxation on high ticket traditional plans led to sharp correction in its stock price given 10-12% of their premiums were coming from this segment and investors were concerned about long term growth potential for the sector. Likelihood of double digit growth in retail APE in Q1FY24 has allayed some of the above concerns.

The company’s Value of New Business (VNB) could increase 28.4% over the year-ago quarter.

Important management insights to watch out for:

• Improvement in persistency ratio 
• Commentary on growth outlook

Rs. Billion	June 2023 estimates	YoY change
New business premium	59.9	21.0%
Renewal premium	61.4	20.4%
Total APE	23.4	23.1%
Savings APE	19.9	26.3%
Protection APE	3.5	7.4%
VNB	6.6	28.4%
VNB Margin	28.0%	120 bps

Source: IIFL Research