Prabhudas Lilladher has given Hold recommendation for HDFC Life Insurance Company with a target price of Rs. 725 in its research report issued on Jun 25, 2021

Prabhudas Lilladher’s research report on HDFC Life Insurance Company

HDFC Life underperformed benchmarks in last six months by 5.4% given, second COVID wave challenges such as risks from claims (death & otherwise) and lockdown led limited activity on protection side. As per channel checks, despite increased awareness, protection business has been slower because of limited mobility, reluctance on medical tests and underwriting stringency. Volumes have been contributing largely from two products in non-Par (which has witnessed competitive intensity leading to higher IRRs revisions) and Par (led by Banca). This in our view will limit any margin expansions as revision in IRRs has been supported by volumes and protection being slower. We are building a 18% EV & VNB growth with gradual margin improvement to 27% over FY22-FY23.


HDFCLI retains valuation premium of 65-70% to its listed peers and we expect return delta should be much lower with limited triggers in near term. We upgrade to HOLD (from Reduce) with revised TP of Rs725 (from Rs660) based on 3.6x Sep23 EV (rolled over from Mar FY23 ABV).