Q4FY21 Result Update - HDFC Life Insurance - ICICI Direct

HDFC Life Insurance reported a steady performance led by healthy new business (led by diversified product mix) and renewal premium, steady persistency and investment income. Gross premium growth remained healthy at 21.6% YoY to Rs. 12911 crore, led by steady traction in renewal to Rs. 6350 crore (up 14.9% YoY) and new business premium to Rs. 6560 crore (up 28.9% YoY). On an APE basis, growth in premiums increased 36.3% YoY to Rs. 2806 crore. Individual APE for FY21 was at Rs. 7120 crore, up 16% YoY. Growth in protection business remained slower with 4% YoY growth in individual premium to Rs. 480 crore while group premium declined 21% YoY to Rs. 3440 crore for FY21, primarily due to slowdown in credit disbursement. The company is seeing improving traction in business both in individual segment (term & par products) and group business (owing to revival in credit protect in Q4FY21). Partner tie-up in FY21 has started to witness business traction.

Valuation & Outlook

Product innovation and launches, diversified business mix and improving traction from recent tie-ups is seen keeping business momentum healthy. Focus on non-metro and non-salaried segment is expected to enhance customer base and thereby business traction. Revival in credit protect and focus on retirement products are seen aiding business growth and margins. We expect gross written premium (GWP) to grow at ~18% CAGR in FY21-23E to Rs. 53890 crore. Steady traction in individual term insurance and gradual pick up in credit protect is seen keeping VNB margin at ~25%. PAT is expected to grow at 10% CAGR over the same period to Rs. 1634 crore. HDFC Life currently trades at ~4.1x FY23E embedded value (EV), which is at a premium compared to its peers. Given the superior business franchise and continued focus on profitability, valuations are expected to remain at a premium. Considering the current business franchise and building anticipated improvement in business momentum and profitability metric, we maintain our target price of Rs. 820/share, valuing the company at ~4.7x FY23E EV. We maintain BUY recommendation on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_HDFCLife_Q4FY21.pdf

Shares of HDFC Life Insurance Company Ltd was last trading in BSE at Rs.678.6 as compared to the previous close of Rs. 704.75. The total number of shares traded during the day was 496631 in over 21458 trades.

The stock hit an intraday high of Rs. 719 and intraday low of 677.1. The net turnover during the day was Rs. 342529469.

Source : Equity Bulls

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