Target: ₹870

CMP: ₹712.55

HDFC Life Insurance reported a 15.7 per cent increase in net premium income, supported by strong growth in single and renewal premiums at 19.1 per cent and 14.5 per cent, respectively, while first-year premium grew by 9.4 per cent. The company’s annualised premium equivalent (APE) rose 9.7 per cent to ₹5,186 crore, and New Business Premium (NBP) increased 15.1 per cent to ₹10,969 crore during the quarter.

Despite the solid performance, management expects moderate growth in H1-FY26 due to a high base effect. However, they anticipate a recovery in H2FY26. Overall, growth for FY26 is expected to be in the mid-teens. The outlook remains positive driven by product mix and distribution strength.

We maintain a Buy rating on HDFC Life with a target price of ₹870, valuing the company at 2.6x FY27E EV. Premium growth remains strong, supported by robust performance in single and renewal segments. Technological innovation and new product rollouts are expected to accelerate growth, while improved persistency will aid margin stability.

However, continued investments in digital infrastructure and a stable agency mix may keep margins rangebound in the near term. Despite regulatory headwinds impacting FY25 margins slightly, HDFC Life is well-positioned to deliver industry-leading growth and superior profitability — justifying its premium valuation versus peers.

Published on April 22, 2025

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