Motilal Oswal is bullish on HDFC Standard life has recommended buy rating on the stock with a target price of Rs 475 in its research report dated January 22, 2019.
Motilal Oswal's research report on HDFC Standard life
HDFCLIFE delivered a stable performance in 3QFY19, with shareholder profits growing 18.5% YoY to INR2.45b (our estimate: INR2.5b). Total un-weighted premium grew 27% YoY (11% YoY in APE terms), led by ~64% growth in single premium. In 9MFY19, the share of protection business increased to 16.6% in total APE, while it stood at 28.1% in un-weighted new business premium. New business margins stood at 24% (24.3% for 1HFY19), driving 25% YoY growth in VNB.
Outlook
We expect ~24% CAGR in new business APE over FY18-21, while margins are likely to improve at a calibrated rate to 25.6% by FY21. We, thus, estimate 27% CAGR in VNB over FY18-21, with RoEV sustaining at average ~20% over the same period. We value HDFCLIFE at INR475 per share (4x Sep’20E EV). Maintain Buy.
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