ICICI Securities upgrades HDFC Life Insurance to Buy, target price Rs 700

ICICI Securities has upgraded HDFC Life Insurance Company to buy (from Add) with a revised target price of Rs 700 (earlier Rs 788). The current market price of HDFC Life Insurance Company Ltd. is Rs 643. HDFC Life Insurance, incorporated in 2000, is a Large Cap company with a market cap of Rs 139496.22 crore, operating in the Financial Services sector.

HDFC Life's key Products/Revenue Segments include Premiums Earned and Other Operating Revenue for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 17270.97 crore, down -39.98% from last quarter Total Income of Rs 28776.43 crore and down -36.10% from last year same quarter Total Income of Rs 27029.15 crore. The company has reported net profit after tax of Rs 421.31 crore in the latest quarter.

The company's top management includes Mr.Keki M Mistry, Mr.Venkatraman Srinivasan, Dr.Bhaskar Ghosh, Ms.Bharti Gupta Ramola, Mr.Sumit Bose, Mr.Ketan Dalal, Mr.Niraj Shah, Mr.Suresh Badami, Ms.Vibha Padalkar, Mr.Kaizad Bharucha. Company has BSR & Co. LLP as its auditors. As on 30-09-2024, the company has a total of 215 Crore shares outstanding.

Investment Rationale
ICICI Securities has upgraded HDFC Life Insurance to BUY (from Add); the target price has been revised to Rs 700. They have factored in weighted APE growth of ~18%/13%/13% with VNB margins (calculated) of 26.1%/26.6%/27.1% for FY25E/26E/27E. This results in an EV of Rs 746 billion and core RoEV of 16.4% in FY27E. The brokerage values HDFCLI based on 2x FY27E EV per share (vs. 2.5x FY26E) and arrive at a revised target price of Rs 700 (vs. Rs 788 previously). The cut adequately factors in any possible regulatory risk ahead.

Promoter/FII Holdings
Promoters held 50.34 per cent stake in the company as of 30-Sep-2024, while FIIs owned 25.63 per cent, DIIs 13.22 per cent.