Prabhudas Lilladher is bullish on HDFC Life Insurance Company has recommended buy rating on the stock with a target price of Rs 585 in its research report date July 24, 2019.
Prabhudas Lilladher's research report on HDFC Life Insurance Company
HDFC Life's overall APE grew strong 66% YoY driven by WRP growth of 58% YoY. Company saw sharp change in mix of individual APE with non-par savings mix going to 63% from 20% at end of FY19 mainly driven by strong growth in new product launched Sanchay Plus which is return guaranteed product (endowment). Strong growth in non-par, continued growth in retail protection and continued annuity focus has led to strong margin improvement of 260bps QoQ to 29.8%. New product carries risk of interest rate shocks but management mentioned but carries hedges from the segment products hence sensitivity from rate movement is limited. We adjust assumptions to factor in strong APE growth & sharp margin improvement but marginally lower EV to factor in lower unwind rate.
Outlook
We retain BUY with revised TP of Rs585 (from Rs465) based on 4.1x Mar-21 EV and 25x NB multiple.
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