HSBC Maintains Positive Stance on Life Insurance Stocks
HSBC Global Research has expressed its bullish outlook on life insurance stocks, particularly favoring HDFC Life. The brokerage firm has increased its price targets for major life insurance companies including SBI Life, HDFC Life, and ICICI Prudential by up to 8%.
Key Highlights
- HSBC maintains a “buy” rating on SBI Life, HDFC Life, and ICICI Prudential
- Price target increases: SBI Life to ₹1,950 (8.3% increase), HDFC Life to ₹870 (4.8% increase), ICICI Prudential to ₹720 (6.66% increase)
- Potential upside: 9.5% for SBI Life, 14% for HDFC Life, 13% for ICICI Prudential from current market prices
Reasons for Optimism
HSBC cites several factors supporting its positive stance:
- Attractiveness of non-linked insurance products is improving
- Potential recovery in credit protect business with increasing unsecured loan disbursements
- Favourable product mix changes and easing competition expected to support margin expansion
- New product launches in 2025 have been primarily in non-linked categories
Growth Prospects
Despite current growth concerns, HSBC expects total Annualized Premium Equivalent (APE) growth to be between 14% and 17% in FY26 for covered stocks. The firm believes HDFC Life is best positioned due to its low exposure to linked products, while SBI Life might be most affected if linked product sales slow significantly.
Margin Outlook
HSBC expects margin improvements due to:
- Favourable product mix changes
- Easing competition
- Increased rider attachment rates
- Expected VNB margin increase by 18 basis points on average in the current financial year
The brokerage firm’s positive outlook is based on further scope for multiple expansion due to margin tailwinds, low downside risks to earnings, and supportive valuations. Analyst coverage shows predominantly “buy” ratings for these stocks across the board.
