Buy HDFC Life Insurance; target of Rs 671: Sharekhan

Sharekhan's research report on HDFC Life Insurance

HLIC’s results came largely in line with expectations for Q2FY2021, indicating steady recovery from the impact of COVID-19. The insurance sector’s growth potential is huge in India; factors like large protection gap, retiral needs, expanding per capita income etc are key long-term growth drivers. We believe strong players such as HLIC are likely to gain disproportionally from the opportunity. The stock is at a valuation of 4.1x/3.4x its FY2022E/FY2023E EVPS. Well-diversified product bouquet (no segment contributing more than 30% of the APE), strong brand image and strong metrics make HLIC attractive.

Outlook

We recommend Buy on HDFC Life Insurance (HLIC) with price target of Rs. 671; we expect HLIC to deliver ~24% VNB margins over the next 2-3 years (on a normalised basis).

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