(Rating: ADD, TP: Rs 721, Upside: 5%)
HDFC Life has outperformed private players in the current fiscal in terms of premium growth. However, its product mix has shifted towards lower margin products such as par. With pick up in ULIPs and concious strategy to reduce non-par business to bring a balance in product mix coupled with stricter underwriting in pure term business, VNB margin expansion will be a challenge. Stock trades at FY23E P/EV of 4x which is significantly higher than other players. While we believe that HDFC Life deserves premium valuations given its balanced product mix, strong distribution network and group's track record of delivering healthy performance in all financial segments, current valuations are fair and we retain our ADD rating with a revised 1-year price target of Rs721.
Shares of HDFC Life Insurance Company Ltd was last trading in BSE at Rs.687.65 as compared to the previous close of Rs. 700.65. The total number of shares traded during the day was 169948 in over 8946 trades.
The stock hit an intraday high of Rs. 708.3 and intraday low of 684.25. The net turnover during the day was Rs. 117781926.