Sharekhan: Buy HDFC Life Insurance with a Target of Rs 870
Sharekhan’s research report on HDFC Life Insurance Company recommends a ‘Buy’ rating for the stock with an unchanged price target of Rs 870. The firm cites HDFC Life’s steady outlook and attractive risk-reward profile after recent regulatory considerations.
Sharekhan’s analysts noted that HDFC Life’s management believes the company is operating within regulatory limits, based on new business premium generated through the bancassurance channel. However, the report also indicates that if new regulations cap the share of the promoter bank or overall Annual Premium Equivalent (APE), further diversification and partnerships would be required.
Consequently, HDFC Life is focusing on diversifying its distribution channels. This includes increased investment in proprietary channels to reduce dependence on any single distribution source. The company is projecting a robust outlook, anticipating an APE growth of 18-20% and a Value of New Business (VNB) growth exceeding 15% over the next few quarters, according to the report.
The stock is currently trading at 2.0x and 1.7x its estimated Embedded Value Per Share (EVPS) for fiscal years 2026 and 2027, respectively.
Outlook
Sharekhan maintains a ‘Buy’ recommendation for HDFC Life, keeping the price target at Rs. 870, based on the consistent APE and VNB outlook. The analysts believe that the risk-reward ratio has become more favorable as the regulatory risk appears to be adequately factored into the current price.
Disclaimer: The investment advice contained in this report reflects the views of the analysts and Sharekhan and is not an endorsement by any other entity. Consult with a certified financial professional before making any investment decisions.
