StoxBox: Views on HDFC Life Insurance Company Ltd. Q4 FY24 Result

HDFC Life came out with a stable set of numbers, with consolidated net profit rising 14% in the quarter which beat consensus estimates. However, the business performance came in short of estimates, with APE and VNB margin declining in the quarter. Net premium income for the quarter stood at Rs. 20,533 crores which grew decently in comparison to the same period in the previous quarter. As guided, the company achieved its stated full-year APE double digit growth target by clocking a growth of 11% (on a normalized basis after adjusting for Rs. 1,000 crores one-off business in March 2023) despite the budget changes affecting high ticket business. We expect the company to increase its VNB margin going forward, with the company’s focus to increase share in the Tier-2 and Tier-3 areas which is showcased through its new branch additions largely in the focus market. Also, the company will be leveraging on the Exide Life’s network which will further enable it to penetrate the targeted markets while maintaining the quality of the business. We believe the company’s counter-share in the parent and strong brand will help the company navigate industry headwinds and provide growth visibility going ahead.

HDFC Life Insurance Company Ltd. Q4FY24 Result First Cut – Stable performance; Net profit beats estimates:

  •  Total Annualized Premium Equivalent (APE) was flat at Rs. 13,291 crores for FY24 compared to Rs. 13,336 crores in FY23. For the quarter, the APE stood at Rs. 4,727 crores as against Rs.5,162 crores in the previous year, declining 8.4%.
  • PAT was up by 34.4% QoQ / up 13.7% YoY to Rs. 411.6 crores in Q4FY24. For the full year, the PAT increased 15% to 1,569 crores from 1,360 crores.
  • The company’s Assets under Management (AUM) stood at Rs. 2,92,220 crores for FY24, registering a 22.0% growth compared to the AUM of Rs. 2,38,782 crores for FY23.
  • New Business Margin stood at 26.3% in FY24 which declined from 27.6% in comparison to the previous year.
  • Company’s 13-month persistency ratio increased to 86.2% in Q4FY24 compared to a year ago period of 85.3%, while the 61st-month persistency ratio was marginally down at 52.0%% for Q4FY24 compared to 52.5% in Q4FY23. For the full year, the 13-month/61-month persistency ratios stood at 87% / 53%, respectively.
  • In FY24, the solvency ratio declined to 187% against the solvency ratio of 203% in FY23.
  • In the Individual WRP category, market share marginally declined to 10.4% in FY24 compared to 10.8% in FY23. In its overall new business premium, market share increased to 8.0% in FY24 compared to 7.9% in FY23.

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