Should you buy HDFC Life after its Q2 results? Here’s what brokerages recommend


New Delhi: Brokerages hold a mixed view on HDFC Life Insurance Company after the private insurer on Monday reported a 5.64 per cent growth in standalone net profit at Rs 326.09 crore for the quarter ended September 30.

The scrip traded 0.20 per cent higher at Rs 571.80 at around 11 am (IST), while the benchmark BSE Sensex was up 175 points, or 0.43 per cent, at 40,606.

Edelweiss Securities has ‘Reduce’ rating on the stock with a target price of Rs 530, while Motilal Oswal Financial Services is ‘Neutral’ on the company and set a price target at Rs 625. On the other hand, YES Securities has ‘Add’ rating with a target of Rs 620.

Edelweiss said, “Valuations are a legacy of sustained higher margin or growth than competition along with brand benefits. An optimal business mix with non-par products’ share of around 30 per cent is a long-term positive, but a short-term margin headwind. At present, valuations fully capture the growth spurt.”

On a consolidated basis, HDFC Life’s net profit stood at Rs 327.83 crore in the reporting quarter as against Rs 308.98 crore a year ago. Its net premium income was Rs 10,045.44 crore, as compared to Rs 7,453.68 crore earlier.

The insurer’s first-year premium stood at Rs 1,675.15 crore as against Rs 1,452.72 crore on a year-on-year basis.

According to YES Securities, the savings business has gathered momentum in Q2 FY21 and is likely to sustain given that the propensity to save is increasing amongst customers. Protection business will continue to witness strong demand on the back of lower penetration and current environment.

“HDFC Life with a balanced product mix and strong distribution channel is well poised to sustain its strong growth trajectory in premiums. Profitability is also expected to improve going ahead with favourable product mix and scale benefits,” YES Securities said.





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