HDFC Life shares gain over 2% after Q2 results; global brokerages remain divided

HDFC Life Insurance Company, a Mumbai-headquartered life insurer, on Tuesday reported a consolidated net profit of Rs 435.2 crore for the July-September period, marking an increase of 15.1 per cent over the corresponding period a year ago. After Q2, the stock ended lower over 3 per cent at Rs 714.4 per share.

Nonetheless, its shares traded with gains of over 2 per cent and at day's high scaled Rs 731.35 per share. The stock's all-time high price is 775.65, implying the stock at the day's high is 6 per cent away from its all-time high price.

The company's net premium income grew 12.3 per cent to Rs 16,613.7 crore on a year-on-year basis, according to a regulatory filing.

Gross income from first-, second- and third-year premiums grew 27 per cent to Rs 3,259.9 crore, 12.7 per cent to Rs 8,831.1 crore and 6.8 per cent to Rs 4,843 crore, respectively. 

The company clocked a 56.1 per cent year-on-year jump in its net commission to Rs 1,854.6 crore, according to the filing.  

Even though the company's margins saw a decline, the company in its earnings call increased the APE growth guidance by 18-20 per cent.

Here's what brokerages make of HDFC Life after its Q2 show

Jefferies continues its buy call on the stock with the target raised to Rs 850 fro the earlier Rs 750 per share. The brokerage held that the company witnessed strong growth in premium led by ULIPS and rebound in non-participating policies. The brokerage said that the company saw a 100 bps impact on margins in 2Q due to timing gap ahead of reset.

Also HDFC Bank channel logged growth of over 20 per cent, Further, Jefferies added transition to new norms should have a manageable impact on margins & improve competitive intensity.

Nomura, meanwhile, has double downgraded the stock to 'neutral' from 'buy' with the target pegged at Rs 735 per share. The brokerage held that there is a lack of near-term triggers with margins remaining weak. It added that for the company to achieve even 15% YoY VNB growth in FY25 , company will have to deliver 25.4% VNB margin in 2H which looks difficult.  Also, the brokerage is of the belief that the company's current valuations capture its positives adequately.

Further, SBI Life remains Nomura's top pick within the insurance sector.