The company reported a 4% year-on-year rise in profit after tax to Rs 496 crore for the March quarter. Net premium income grew 9% YoY to Rs 25,829 crore, indicating steady momentum in its core business despite a challenging environment.
The insurer will issue 1.45 crore equity shares at Rs 688.52 each to HDFC Bank, subject to shareholder and regulatory approvals. The capital infusion aims to improve solvency and support growth plans.
The board has recommended a final dividend of Rs 2.1 per share for FY26, pending shareholder approval. The record date is June 19, with payout expected on or after July 20.
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Morgan Stanley has maintained an Overweight rating on HDFC Life with a target price of Rs 745, implying an 18% upside. The brokerage noted that the value of new business declined 8% YoY, missing its estimates, while APE growth remained muted at 1% due to a slowdown in the banca channel and the impact of GST changes. However, retail protection and annuity segments continued to deliver strong growth. Margins stayed stable, supported by an improved product mix. Morgan Stanley expects a gradual recovery starting FY27 and sees VNB growing at a CAGR of 16% over FY26 to FY28. It also believes valuations remain attractive despite near-term growth challenges.
Goldman Sachs also retained its Buy rating on HDFC Life with a target price of Rs 735. The brokerage attributed the miss in VNB to weak trends in March. It highlighted strong growth in the protection segment, while par and non-par segments remained under pressure. Margins held steady, aided by a favourable product mix. However, Goldman Sachs has lowered its estimates for FY27 and FY28 due to slower topline growth expectations. Despite this, it expects a steady recovery in FY27.
Nomura maintained a Neutral stance on HDFC Life and cut its target price to Rs 725 from Rs 815, citing the need for stronger growth to justify premium valuations. The brokerage noted that while the company had earlier aimed to double VNB over five years, increasing competition and saturation in core markets may require a strategic shift towards deeper markets.
It believes that any re-rating will depend on faster VNB growth over the medium term. Factoring in these headwinds, Nomura has reduced its APE growth estimates for FY27 and FY28 by 7% to 10% and VNB growth estimates by 10% to 11%. It now expects subdued valuation multiples compared to historical trends, with its revised target implying a March 2028 PEV of 1.90x. The stock is currently trading at a similar 1-year forward PEV of 1.9x.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)