Target: ₹870
CMP: ₹714.40
HDFC Life continues to guide for a 15 per cent growth in APE and 17-18% growth in VNB for FY25E. The company is confident of growing retail APE higher than industry APE and doubling VNB every four years. VNB margins are expected to remain at 25-26 per cent.
The company posted modest retail APE growth of 9.8 per cent y-o-y in August, while total APE grew by 8.6 per cent y-o-y as Group APE stagnated. The company saw market share improving in retail APE to 11.4 per cent (up 106 bps y-o-y) and in total APE to 10.1 per cent (66 bps y-o-y) on FY25 YTD basis.
HDFC Life remains focused on maintaining a balanced product mix across businesses with leadership in new product launches. New product launches, pick up in non- par segment, focus on tier II/tier III geographies, higher counter share at HDFC Bank, other bancassurance partnerships and investments in agency channel will support growth. The new surrender regulation to impact VNB margins by about 100 bps, which the company may partially offset by a combination of better pricing, change in payout structures and a better product mix.
Key Risk: sSlower APE growth, lower VNB margins and any adverse regulatory policies/guidelines may affect its profitability.