HDFC Life hits 52-week low on lower-than-expected December quarter results

Shares of HDFC Life Insurance hit a 52-week low of Rs 623, down 3 per cent on the BSE in Monday’s intra-day trade after the company reported a lower-than-expected 3.3 per cent year-on-year (YoY) rise in net profit at Rs 273.7 crore for the quarter ended December due to a decline in income from investment.

The stock of the private insurance firm fell below its previous low of Rs 627 hit on December 20, 2021. At 12:54 pm, it was down 2.2 per cent at Rs 627, as compared to a 2.12 per cent decline in the S&P BSE Sensex at 57,785 points.

In Q3FY22, the company’s gross premium income remained healthy with a 27 per cent increase to Rs 12,255 crore, led by traction in renewal premium and new business premium. On an annualised premium equivalent basis, premiums increased by 20.4 per cent YoY to Rs 2576 crore. Opex ratio (management expense) ratio increased 70 bps QoQ to 12.3 per cent.

In our view, premium growth for HDFC Life has remained healthy led by growth in new business premium. The total revenue reported a muted number due to significant drop in Income from investment, which was further partially offset by lower expenses due to decrease in actuarial liabilities. As a result, PAT growth remained muted and below our estimate, said brokerage ICICI Securities. 

The brokerage expects moderation in covid claims and buffer to aid value of new business (VNB) margin at 26 per cent ahead. The new products launch and select growth may also aid business growth. The strong distribution network remains core to maintain business momentum. Approval from IRDA, CCI for merger of Exide Life expected in Q4FY22 are among key triggers for future price performance for the stock, it said.