HDFC Life Insurance share price fell in the early trade on July 20 after the company posted its June quarter earnings.
Private life insurer saw a 40.1 percent year-on-year (YoY) fall in its consolidated net profit at Rs 269.55 crore. This was on the back of rise in reserves.
New business margins (NBM) during the quarter saw an improvement on a sequential as well as YoY basis on the back of growth and balanced product mix.
The NBM for Q1FY22 stood at 26.2 percent, higher than 24.3 percent delivered in Q1 last year and 26.1 percent in full year FY21.
In comparison to Q1 of last fiscal, HDFC Life clocked higher renewal collections, with 13th month persistency improving from 87 percent to 90 percent.
The Value of New Business stood at Rs 408 crore, a growth of 40 percent over last year.
Here is what brokerages have to say about the stock and the company post June quarter earnings:
Jefferies | Rating: Buy | Target: Cut to Rs 800 from Rs 880
The brokerage feels the company’s reserves should be adequate to meet the Covid second wave claims.
Its Value of New Business (VNB) grew 40% YoY, which is largely in-line with estimates and Jefferies sees a 19% VNB CAGR over FY21-24. The company’s persistency was stable/ better across the buckets over Q4, the brokerage said.
Nomura | Rating: Neutral | Target: Raised to Rs 750 from Rs 725
The broking house kept the neutral rating for the stock on the back of valuations as the second wave of Covid affected the Q1 financials.
It remains a compounder but await a better entry point, the brokerage said. It builds in 16%/18% FY21-24 CAGR in APE/VNB. However, recent underperformance is gradually closing valuation gaps versus peers, it added.
Motilal Oswal | Rating: Neutral | Target: Rs 725
HDFCLIFE remains focused on maintaining a balanced product mix across the business, with an emphasis on product innovation and superior customer service. However, in the near term, the Non-PAR/Annuity and Credit Life segments are likely to see healthy growth.
On the other hand, it remains cautious on the Individual Protection business on claims-related uncertainty due to COVID-19. Overall, Protection remains a long-term structural story, and the company would continue to leverage this opportunity prudently.
Prabhudas Lilladher | Rating: Hold | Target: Rs 725
Company continues have a steady product mix, although in Q1FY22 ULIP improved & Credit protect bounced back sharply. Focus continues to remain on long term products, while is cautious in near term on protection as profitable underwriting is quite tough.
We continue to build a 18% ROEV, 18% EV growth and improving margins trajectory towards 27% over FY22-24E. Although, strong metrics are visible in multiple of 3.5x Sep-23 EV and we await for better entry points.
At 09:22 hrs HDFC Life Insurance Company Limited was quoting at Rs 675.35, down Rs 3.25, or 0.48 percent on the BSE.
The share touched a 52-week high of Rs 746 and a 52-week low of Rs 556.25 on 09 March, 2021 and 30 September, 2020, respectively.
Currently, it is trading 9.47 percent below its 52-week high and 21.41 percent above its 52-week low.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.