HSBC Maintains Bullish Stance on Life Insurance Stocks
Global brokerage HSBC has reiterated its positive outlook on the life insurance sector, noting that earnings risks appear limited and current valuations remain supportive despite the recent market uptrend. The firm maintains a “buy” rating on major players SBI Life, HDFC Life, and ICICI Prudential, with a particular preference for HDFC Life.
HSBC has raised its price targets for these insurers by up to 8 percent across the board. The new target prices are Rs 1,950 per share for SBI Life, Rs 870 for HDFC Life, and Rs 720 for ICICI Prudential. The brokerage notes that the appeal of non-linked insurance products is steadily improving, which, along with a recovery in credit term plans, is expected to offset current growth pressures.
The margin outlook is becoming more positive, supported by shifts in product mix and declining competitive intensity. HSBC points out that while the consensus expectation for total annualised premium equivalent (APE) growth among large private insurers in FY26 stands between 13 percent and 14 percent, several tailwinds could bolster growth prospects. These include a more accommodative interest rate environment, a rebound in unsecured loan disbursements, and the growing appeal of non-participating savings products.
Overall, HSBC anticipates APE growth to range between 14 percent and 17 percent in FY26 for the insurance stocks under its coverage. HDFC Life appears best positioned due to its relatively low dependence on linked products, while SBI Life may face greater impact should linked product sales decline sharply.
The brokerage expects incremental changes in product mix to support margin recovery after margins took a hit in FY25 due to a slowdown in credit protect offerings, heightened competition, and revised surrender value norms. Most new product launches in 2025 have been concentrated in the non-linked category, which should further contribute to margin expansion. HSBC projects that value of new business (VNB) margins will rise by an average of 18 basis points year-on-year during the current financial year.
