KR Choksey has given Buy recommendation for HDFC Life Insurance Co with a target price of Rs. 706 in its research report issued on Oct 27, 2022
KR Choksey’s research report on HDFC Life Insurance Co
The Gross written premium for Q2FY23 stood at INR 1,32,826 Mn, healthy growth of 32.2% QoQ/ 14.2% YoY led by strong growth in the renewal premium. The New Business Premium (NBP) for the quarter grew by 28.8% YoY, while renewal premium grew 35.4% QoQ (37.2% YoY). New business margin (NBM) expanded by 171 bps YoY (149 bps QoQ) at 28.3% in Q2FY23 on a profitable product mix and merger impact. The value of the new business increased to INR 7,480 Mn, registering a QoQ growth of 46.7% (10.3% YoY) in Q2FY23. PAT for Q2FY23 was at INR 3,262 Mn, a growth of 19.0% vs Q2FY22. Solvency ratio as of September 30, 2022, stood at 210%. AUM as of September 30, 2022, stood at 20,43,920 Bn, a growth of 6.9% YoY (2.1% QoQ). The embedded value of the merged entity is INR 360.16 Bn.
We assign a 3.25x P/EV on FY24E EVPS of INR 227.0, a VNB multiple of 23x to HDFC Life, and arrive at the weighted average Target Price at INR 706 per share (unchanged) (50:50 weights on the P/EV and appraisal value methodology), implying a 32.2% upside potential over CMP. We have maintained our ‘BUY’ rating on HDFC Life Insurance Co. Ltd.