HDFC Life shares soar 12% on Q3 push, brokerages optimistic

HDFC Life Insurance shares nearly soared 12 per cent to hit an intraday high of ₹663.60 on Thursday, a day after the company posted a 14 per cent increase in net profit for the quarter ended December 2024 at ₹415 crore as against ₹365 crore in the year-ago period.

However, total income declined to ₹16,914 crore in the latest quarter from ₹26,694 crore in the year-ago period.

The insurance company’s annual premium equivalent (APE) grew 20 per cent y-o-y, and value of new business (VNB) increased 14 per cent y-o-y, while the VNB margin declined 140 bps to 25.1 per cent. According to analysts, the outlook of over 15 per cent VNB growth re-emerged from the challenges of open architecture, lower tax exemption and hike in surrender charges.

A vast majority of brokerages, including global, have been bullish on the stock assigning ‘buy’ rating. Analysts of JM Financial maintained buy rating at an unchanged target price of ₹900. They consider 12 per cent growth in 3Q to be minor blip in a year where 9M growth tracks at 20 per cent. With group business (led by savings) growing at 32 per cent in 3Q, they expect total APE growth of 17 per cent for 4Q, implying FY25 APE growth of 19 per cent.

Nuvama Institutional Equities said amid the slow growth, margins have bounced back, surpassing its estimates by 3.2 per cent. It has attributed the improvement in q-o-q VNB margin to the repricing of NPAR products and successful pass-through of the bulk of increased surrender values to policyholders and distributors. The brokerage has maintained a buy call at an increased target price of ₹850 from ₹830.

Observing that the changes in the commission structure after the discussion will lead to only 20-30 bp impact on VNB margins due to the surrender charge regulation, Motilal Oswal has increased VNB margin assumptions on the back of a better-than-expected performance in 3QFY25. The brokerage has reiterated buy rating at a target price of ₹800.

Global brokerages Investec, Jefferies, HSBC have assigned buy rating at the target prices of ₹850, ₹750 and ₹750, respectively.

Centrum Institutional Research sees 31 per cent upside for the stock at a target price of ₹780. The brokerage has maintained ‘buy’ given the robust demand in tier-2/3 markets, steady market share in the HDFC Bank channel and newer products.

Yes Securities has maintained ‘add’ rating at a revised target price of ₹700, while Elara Capital has recommended ‘accumulate’ rating at the same target price of ₹700.

Analysts of ICICI Securities, upgrading the stock from add to buy rating, have slashed the target price to ₹700 from ₹788, citing possible regulatory risks ahead.

Global brokerage Macquarie has maintained neutral stance at a target price of ₹570, highlighting that the muted VNB growth was primarily driven by lower APE growth and the latter’s moderation was broad-based.

CLSA has given an outperform rating, but slashed the target price to ₹690 per share.

The stock traded at ₹643.45 on the NSE, higher by 8.29 per cent as at 2.13 pm. On the BSE, the stock soared 8.37 per cent to ₹644.