Result Analysis: HDFC Life Insurance Company Ltd. (CMP- ₹590.55)

Result Update: Q3FY23

HDFC Life Insurance Company Ltd. (HDFC Life) was established in 2000, and is a leading long-term life insurance solutions provider in India, offering a range of individual and group insurance solutions that meet various customer needs such as Protection, Investment, Pension, Savings, Annuity, and Health. HDFC Life continues to benefit from its increased presence across the country having a wide reach with 372 branches and additional distribution touch-points through several new tie-ups and partnerships. The count of its partnerships is over 300, comprising traditional partners such as NBFCs, MFIs and SFBs, and including new-ecosystem partners.

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    Stock Details

    Market Cap. (Cr.) 126920
    Equity (Cr.) 2149.18
    Face Value 10.00
    52 Wk. high/low 660 / 497
    BSE Code 540777
    Book Value (Rs) 57.45
    Sector Insurance


    Key Ratios

    Debt-equity: 0.05
    ROCE%: 0.75
    ROE%: 11.08
    EPS TTM: 6.85
    P/BV: 10.28
    P/E TTM: 86.21

    Result Highlights:

    • HDFC Life’s Revenue stood at Rs 19,970 crore, which shows a growth of 18.56%YoY, and of 9.62% QoQ.
    • Persistency ratios for the 13th month remained unchanged at 87%, while the 61st month’s persistency ratio fell 100 basis points to 52%.
    • Solvency ratio that measures the extent to which assets cover commitments for future liabilities, rose to 209% from 190% on the back of equity infusion in the second quarter.
    • Value of new business (“VNB”) i.e. present value of the future profits associated with new business written during the period, grew 22% to Rs.2,163 crore.
    • Value of New Business margin remained unchanged at 26.5%.
    • Post-merger, the product mix consisted of 39% non-par. savings, 6% annuity, 4% protection, 29% par. products, and 21% unit-linked plans on an annualised premium equivalent basis.
    • New business premium grew 9.56% to Rs 18,713 crore. Whereas Assets under management were at Rs 2.3 lakh crore, a rise of 20% post-merger.
    • The Company’s profit after tax was 316 crores for Q3-FY23, which showed a growth YoY of 14.88% and a de-growth of 3.95% QoQ.
    • APE was Rs.8,174 crores for 9M-FY2023, a growth of 21.84% as compared to Rs.6,709 crores for 9M-FY2022.

    Financial Performance:


    Management Commentary:

    •  Vibha Padalkar, MD & CEO said “.While globally, headwinds persist from an   economic perspective, India appears to be relatively better positioned.   Insurance as a sector continues to be a beneficiary of a relatively robust   economy, stable savings trends and favourable regulatory regime.   Against this backdrop, we continue to maintain a steady growth trajectory.   Despite intense competition, we have consistently been ranked amongst the top 3 life insurers across individual and group businesses. We are happy to share that the post-merger integration and synergy realisation from the combined business is progressing as per plan. This has been demonstrated by achievement of margin neutrality during this period. The newly added distribution partners now have access to HDFC Life’s products and digital capabilities”.

    Shareholding Pattern:

    Promoters & Promoter Group 50.32%
    FIIs  30.53%
    DIIs 6.23%
    Public 8.13%
    Others 4.79%


    HDFC Life’s revenue jumps by 18.56%YoY, and by 9.62% QoQ at the same time the profits of the company grew by 14.88% YoY, but had a marginal decline of 3.95% QoQ basis. VNB grew at 22% at the same time on a YTD basis, company grew by 13% leading to a market share of 15.8% amongst private insurers. India’s insurance sector has a low penetration of about 22% which is very low as compared to the other developed nations and going forward it is expected to grow to 125% by FY-2035 which gives the company a huge headroom to grow. The company reported EPS of Rs.4.73 for 9MFY23, and we expect the company to clock in the EPS of Rs.6.31 for FY23


    Particulars (In Cr.) Q3FY23 Q2FY23 Q3FY22      QoQ %          YoY%
    Net Premium  Earned 14,402 13,138 12,147 9.62% 18.56%
    Other Operating Income 5,174 9,945 2,163 -47.97% 139.20%
    Other Income 394 87 121 352.87% 225.62%
    Total Income 19,970 23,170 14,431 -13.81% 38.38%
    Total Operating Expenditure 19,787 22,809 14,158 -13.25% 39.76%
    Operating Profit 183 361 273 -49.31% -32.97%
    Provisions & Write-Offs -1 6 -21 -115.76% -95.57%
    Profit Before Tax 184 355 295 -48.17% -37.63%
    Tax -132 26 20 -607.69% -762.65%
    Profit After Tax 316 329 275 -3.95% 14.88%
    Segment Premium Income (In Cr.) Q3FY23 Q2FY23 Q3FY22 QoQ % YoY% Segment %
    Par Individual & Group Life 3,240 3,067 2,397 5.64% 35.17% 22.50%
    Par Individual & Group Pension 39 41 42 -4.88% -7.14% 0.27%
    Non-Par Individual & Group Life 5,674 5,398 4,173 5.11% 35.97% 39.40%
    Non-Par Life Group Variable 95 70 349 35.71% -72.78% 0.66%
    Non-Par Individual & Group Pension 88 96 436 -8.33% -79.82% 0.61%
    Non-Par Individual & Group Pension Variable 105 132 459 -20.45% -77.12% 0.73%
    Non-Par Individual & Group Annuity 1,855 1,486 1,160 24.83% 59.91% 12.88%
    Non-Par Individual & Group Health 8 11 7 -27.27% 14.29% 0.06%
    Unit Linked Individual Life 2,764 2,505 2,661 10.34% 3.87% 19.19%
    Unit Linked Individual Pension 73 81 92 -9.88% -20.65% 0.51%
    Unit Linked Group Life 421 206 334 104.37% 26.05% 2.92%
    Unit Linked Group Pension 17 19 15 -10.53% 13.33% 0.12%
    Reinsurance 21 25 21 -16.00% 0.00% 0.15%
    Total 14,402 13,138 12,147 9.62% 18.56% 100.00%
    Particulars (In Cr.) 9M-FY23 9M-FY22 FY22          YoY%
    Value of New Business (VNB) 2163 1780 2675 21.52%
    Individual APE* 6874 5577 9758 23.26%
    Total APE 8174 6709 24155 21.84%
    New Business Premium (Indl. + Group) 18713 17075 24155 9.59%
    Renewal Premium (Indl. + Group) 19194 14467 21808 32.67%
    Total Premium 37907 31542 45963 20.18%
    Profit After Tax 1001 850 1208 17.76%
    New Business Margins 26.50% 26.50% 27.40% 0bps
    Solvency Ratio 209% 190% 176% 1900bps
    13M / 61M Persistency 87%/52% 87%/53% 87%/54% 0bps/100bps

    *- Annualized Premium Equivalent

    Source: Company website, EWL Research

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