Q1FY23 Preview: HDFC Life: Total APE seen at Rs18.2 billion, VNB margin at 28.0%

19 Jul 2022 , 09:33 AM

Result date: 19^th July, 2022
Recommendation: Add
Target price: Rs540

One of the leading private life insurers in India, HDFC Life Insurance Company (HDFC Life) is likely to post strong set of results for the June 2022 quarter.

Its total Annualized Premium Equivalent or APE could grow 16.5% over the year-ago quarter, amid continued momentum. The company’s balanced product mix, healthy growth in new premiums and strong trends in annuity as well as PAR products will aid overall performance.

Lower COVID-related claims and mortality-related provisions will aid overall profitability during the quarter. Value of New Business margin or VNB margin could improve 180 basis points on a year-on-year basis, in sync with the robust show on the topline. The company’s expense ratio could witness some uptick during the quarter.

Important management insights to watch out for:
·         Trends in demand across segments
·         Update on market share gains
·         Improvement in persistency ratio
 

(Rs billion)	June 2022 estimates	YoY change
New business premium	48.5	28.8%
Renewal premium	45.3	16.4%
Total APE	18.2	16.5%
Savings APE	15.2	15.9%
Protection APE	2.9	19.9%
VNB	5.1	24.5%
VNB margin	28.0%	180 bps

Source: IIFL Research