Geojit Financial Services Recommends Buying HDFC Life Insurance with Target of Rs 710

Geojit Financial Services is bullish on HDFC Life Insurance Company and suggests buying the stock, targeting a price of Rs 710, according to their report dated June 19, 2024.

Summary of HDFC Life Insurance Company Report by Geojit Financial Services

HDFC Life Insurance Company, a subsidiary of HDFC Bank, offers a range of insurance services including life, health, property, and automobile protection. In Q4FY24, HDFC Life reported a 5.5% year-on-year growth in net premiums to Rs. 20,488 crore. Although there was a decline in new business premiums, this was offset by growth in renewal premiums. The company reported a value of new business (VNB) of Rs. 3,501 crore, down 4.7% year-on-year, with the VNB margin contracting to 26.3% due to an unfavorable product mix and increased commission expenses. However, assets under management (AUM) grew by 22.4% year-on-year to Rs. 2,92,220 crore.

Looking ahead to FY25, HDFC Life aims for a 15% year-on-year growth in retail and total annualized premium equivalent (APE). The management plans to boost long-term growth by increasing the share of bancassurance in its channel mix and maintaining a balanced product portfolio. Expansion of agent numbers and branch network enhancements are expected to support future performance.

Future Outlook

Geojit Financial Services has upgraded its rating on HDFC Life Insurance from HOLD to BUY, setting a revised target price of Rs. 710 based on 2.25 times the estimated FY26 embedded value (EV) per share. This reflects their positive outlook on HDFC Life’s growth prospects and strategic initiatives in the insurance market.

This analysis provides insights into HDFC Life’s operational performance and strategic direction, emphasizing potential opportunities for investors in the insurance sector.