HDFC Life Q2 in line; Analysts see margin pressure but maintain 'Buy' calls

Brokerages on HDFC Life Q2 results: HDFC Life Insurance (HDFC Life) reported a steady performance in Q2FY26, with analysts largely seeing results in line with expectations, though some margin pressures are emerging due to the impact of GST input tax credit (ITC) losses.

 

On the bourses, HDFC Life share price tumbled up to 4.61 per cent to hit an intraday low of ₹726.15 per share. At 9:30 AM, HDFC Life share price was trading 3.09 per cent lower at ₹737.70. By comparison, BSE Sensex was trading 0.44 per cent higher at 82,965.46 levels.

 

The company posted an annualised premium equivalent (APE) of ₹4,190 crore for Q2FY26, reflecting a 9 per cent year-on-year (Y-o-Y) rise, supported by balanced growth in both individual and group segments. For the first half of FY26, the company’s APE stood at ₹7,410 crore, up 10 per cent Y-o-Y. Analysts at Emkay and Motilal Oswal noted that the growth trajectory aligns with the management’s expectations and is underpinned by a recovery in demand, particularly following the recent GST rate cut.

 

HDFC Life’s value of new business (VNB) also grew in line with estimates. In Q2FY26, VNB increased 8 per cent Y-o-Y to ₹1,010 crore, resulting in a VNB margin of 24.1 per cent. For H1FY26, VNB grew 10 per cent Y-o-Y to ₹1,820 crore, with a margin of 24.5 per cent, largely flat compared to the previous year.   ALSO READ | Should you buy or sell Tata Communications shares post Q2? Analysts weigh 

Emkay analysts highlighted that the VNB margin was impacted by a higher contribution from unit-linked insurance plans (ULIPs), which was partially offset by a stronger share of protection business, longer-tenure products with higher sum assured, and disciplined pricing of non-participating products.

 

Net profit for Q2FY26 rose 3 per cent Y-o-Y to ₹450 crore, slightly missing analyst estimates, although back-book profits surged 14 per cent. For H1FY26, profit after tax (PAT) grew 9 per cent Y-o-Y to ₹990 crore. The company’s embedded value (EV) at the end of H1FY26 was ₹59,540 crore, with a return on EV of 14.2 per cent.

 

Moving forward, management expects growth in the mid-teens for the remainder of FY26, likely outperforming industry averages. 

 

Analysts noted that while the loss of GST ITC may reduce gross VNB margins by around 3 per cent, operational measures such as adjusting commissions and enhancing efficiencies should help mitigate the impact. Motilal Oswal expects VNB growth to normalise from FY27, with distribution realignments and operational adjustments stabilising margins by Q4FY26.

 

Brokerages made slight adjustments to their forecasts in light of Q2 results. Emkay trimmed APE estimates and lowered VNB margin projections by 20-50 basis points for FY26-28, retaining a ‘Buy’ rating with a September 2026 target price of ₹850.   ALSO READ | Motilal Oswal, Nuvama raise target on HDFC AMC post Q2; all details here 

Motilal Oswal factored in a 0.5 per cent EV hit on the back book, revising EV estimates downward by 0.6 per cent across FY26-28, and set a September 2027 TP of ₹910, reiterating ‘Buy.’ Nuvama slightly reduced its target price to ₹910 from ₹920 and lowered FY27-28 VNB and margin assumptions, also maintaining a ‘Buy’ rating.

 

Considering these factors, analysts view HDFC Life’s Q2 performance as broadly in line, with moderate growth and stable margins. While short-term pressure on VNB margins persists due to GST-related issues, operational adjustments and robust product offerings are expected to support earnings growth over the medium term, keeping the stock attractive for long-term investors.