KR Choksey has given Buy recommendation for HDFC Life Insurance Company with a target price of Rs. 706 in its research report issued on Apr 28, 2022
KR Choksey’s research report on HDFC Life Insurance Company
The Gross Written Premium (GWP) for Q4FY22 stood at INR 1,42,897 Mn a strong growth of 11% YoY owing to a robust growth in the renewal premium which stood at 73,412 Mn (growth of 15.6% YoY). For the full year FY22, GWP grew 19.1% YoY at INR 4,59,628 Mn driven by both new business premium and renewal premium. The VNB for Q4FY22 stood at INR 9,000 Mn, an increase 15.1%/29.7% YoY/QoQ. New business margin (NBM) expanded by 237 bps YoY at 29.5% in Q4FY22. The value of new business increased to INR 26,800 Mn, registering a YoY growth of 22% in FY22. The NBM for FY22 stood at 27.5% vs 26.2% in FY21. The solvency as on March 31, 2022, stood at 176%, post the cash payout of INR 7,260 Mn to Exide Industries, as part-consideration for the acquisition of Exide Life.
We assign a 3.25x P/EV on FY24E EVPS of INR 227.0 and a VNB multiple of 26x to HDFC Life and revising the weighted average Target Price at INR 706 per share (previously INR 790 per share) (50:50 weights on the P/EV and appraisal value methodology), implying a 28.9% upside potential over CMP. We have maintained our ‘BUY’ rating on HDFC Life Insurance Co. Ltd.