HDFC LIFE – Vibrant growth

HDFC Life Insurance Company Ltd. is a long-term life insurance provider with its headquarters in Mumbai, offering individual and group insurance services and it was incorporated on 14 August 2000.

HDFC Life Insurance Company is engaged in carrying on the business of life insurance. The Company offers a range of individual and group insurance solutions. The portfolio comprises of various insurance and investment products such as Protection, Pension and Savings instruments.

Quarterly Earnings Walkthrough

HDFC Life Insurance Company Ltd has registered a 15 percent growth in its consolidated net profit to Rs 315. crore for the third quarter as compared with Rs 274 crore in the same previous year quarter, which has been supported by strong new business growth.

Considering life insurance companies, the key profitability metrics are VNB, which computes profitability from total business in a certain period, and new business margin (NBM) which indicates investors the degree of profitability from each policy written.

VNB is used to measure the profitability of new business written in a period. NBM is a system used by insurers to measure the cost of and profit from writing new policies.

For the December quarter, the value of the new business was Rs 875 crore. For the nine-month period ended December 31, 2022, the value of new business was Rs 2163 crore, greater than double that of Rs 923 for the corresponding period of the previous year. HDFC Life’s VNB growth was driven by new business expansion and margins. The new business margin for the quarter was at 27% and for the nine-month period 26.5%, steady from the previous year quarter.

Segment wise performance

First-year premiums have grown by a rigid 30% to Rs 2,724. crore for the quarter from Rs 2,116 crore in the previous year period.

The retail business has grown by 17%, faster than the broad industry growth. On an annualised premium equivalent basis, the growth of the business was at 25%year-on-year.

Growth in premiums was strong in all categories. The company’s annuity business has grown greater than 50%, although on a low base.

Protection business has produced a sturdy growth of 25%. However, the retail protection remains average.

Technical Analysis

HDFCLife Weekly Candlestick Chart on Sharekhan’s TradeTiger

HDFC Life stock price has fallen down to the 61.8% retracement level and the latest candle indicates that the price may break below this level as it fails to receive adequate support. The price may receive crucial support with the back of the strong third quarter. The price is below the 100-day exponential moving average which marks the stock as oversold and the weekly MFI is at 19 points which gives us a strong confirmation that the price currently is hugely oversold. Investors may enter the stock with a stop loss or after viable signs of support at the 61.8% level.

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