Sharekhan’s research report on HDFC Life Insurance Company reveals that in Q4, Annual Premium Equivalent (APE) grew by 10% year-over-year, led by a 9% year-over-year growth in individual APE. The company’s Value of New Business (VNB) margins exceeded expectations, improving by approximately 40 basis points year-over-year to 26.5%. The management guided for modest APE growth in the first half of FY26, with expectations of picking up in the second half. The outlook is to grow APE ahead of the industry average, while maintaining range-bound VNB margins with a positive bias. The stock currently trades at 2.4x/2.0x its FY2025E/FY2026E/FY2027E EVPS. Sharekhan maintains a Buy rating with an unchanged price target of Rs. 870.
Key Highlights
- APE grew by 10% y-o-y in Q4, below estimates
- Individual APE grew by 9% y-o-y, while overall APE for FY25 was healthy at 16% y-o-y
- VNB margins improved by ~40 bps y-o-y to 26.5% in Q4, beating expectations
- Management expects modest APE growth in H1FY26, picking up in H2
- Endeavour is to grow APE ahead of industry average
- VNB margins expected to remain range-bound with positive bias
Sharekhan’s Outlook
The stock is trading at 2.4x/2.0x its FY2025E/FY2026E/FY2027E EVPS. Sharekhan maintains a Buy rating on HDFC Life Insurance Company with an unchanged price target of Rs. 870.
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