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HDFC Life came out with a stable set of numbers, with consolidated net profit rising 15% in the quarter, meeting consensus estimates. The life insurer registered a substantial increase in the number of policies and witnessed an expansion in ticket size. The company’s growth outpaced both the private sector and the overall industry. The growth resurgence was experienced in Tier 1 markets whilst maintaining strong growth in Tier 2 and 3 geographies, which continued to account for a significant portion of the business. Net premium income for the quarter stood at Rs. 12,548 crores, which grew decently compared 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 31% despite the budget changes affecting the high-ticket business. We expect the company to increase its VNB margin going forward, with its focus on growing its share in the Tier-2 and Tier-3 areas showcased through its new branch additions, mainly in the focus market. Also, the company will be leveraging Exide Life’s network, which will further enable it to penetrate the targeted markets while maintaining the quality of the business. However, the key areas to monitor going forward include product-level growth, especially in protection products, and margin guidance for APE and VNB. 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. Q1FY25 Result First Cut – Stable performance; Net profit meets estimates

• Total Annualized Premium Equivalent (APE) for the quarter stood at Rs. 2,866 crores as against Rs. 2,328 crores in the previous year, growing 23.1%.
• PAT was up by 15.0% YoY to Rs. 478.0 crores in Q1FY25.
• The company’s Assets under Management (AUM) stood at Rs. 3,10,244 crores for Q1FY25, registering a 22.0% growth compared to the AUM of Rs. 2,53,301 crores for Q1FY24.
• New Business Margin stood at 25.0% in Q1FY25, which declined from 26.2% in the previous year.
• Company’s 13-month persistency ratio increased to 88.0% in Q1FY25 compared to a year ago period of 87.0%, while the 61st-month persistency ratio stood at 56.0% for Q1FY25 compared to 53.0% in Q1FY24.
• In Q1FY25, the solvency ratio declined to 186% against the solvency ratio of 200% in Q1FY24.
• In the Individual WRP category, market share improved to 11.4% in Q1FY25 compared to 10.6% in Q1FY24.