JM Financial has issued a buy recommendation for HDFC Life Insurance Company, setting a target price of Rs 800, with the current market price at Rs 618.95. HDFC Life, established in 2000 and valued at Rs 133,097.03 crore, operates in the Financial Services sector. For Q4 FY24, the company reported a consolidated income of Rs 17,270.97 crore, a decline from previous quarters, and a net profit of Rs 421.31 crore. JM Financial anticipates a 15.7% CAGR in APE over FY25-FY27, with an improvement in margins, and has adjusted its target valuation based on the firm’s financial performance and growth potential.
Key products and revenue streams for HDFC Life Insurance Company encompass Premiums Earned and Other Operating Revenue for the fiscal year ending 31-Mar-2024.
Financials
For the quarter ending 31-12-2024, the company reported a Consolidated Total Income of Rs 17270.97 crore, which reflects a decline of -39.98% compared to the previous quarter’s Total Income of Rs 28776.43 crore, and a decrease of -36.10% in comparison to the same quarter last year, which reported a Total Income of Rs 27029.15 crore. In the most recent quarter, the net profit after tax was Rs 421.31 crore. The executive management team includes Mr. Keki M Mistry, Mr. Venkatraman Srinivasan, Dr. Bhaskar Ghosh, Ms. Bharti Gupta Ramola, Mr. Sumit Bose, Mr. Ketan Dalal, Mr. Niraj Shah, Mr. Suresh Badami, Ms. Vibha Padalkar, and Mr. Kaizad Bharucha. BSR & Co. LLP serves as the company’s auditors. As of 31-12-2024, there are a total of 215 crore shares outstanding.
Investment Rationale
HDFC Life has successfully navigated FY25 with impressive growth and maintained lower margin compromise compared to peer insurers. JM Financial forecasts a 15.7% CAGR in APE over FY25-FY27e, with margins projected to improve to 26.0% by FY27e from 25.3% in FY25e. The brokerage values the company at 2.2x FY27e EVPS (down from 2.5x previously) of Rs 355, indicating an EV CAGR of 16.1% over the FY25-FY27e period. They uphold their BUY recommendation with a revised target price of Rs 800 (reduced from Rs 900 previously).
Promoter/FII Holdings
As of 31-Dec-2024, promoters held a 50.32 percent stake in the company, while Foreign Institutional Investors (FIIs) owned 25.14 percent and Domestic Institutional Investors (DIIs) held 13.7 percent.
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