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HomeBreakingAnalysts See Steady Margins After Merger With Exide Life

Analysts See Steady Margins After Merger With Exide Life


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Most analysts retained their ‘buy’ ratings on HDFC Life Insurance Co. after the second-quarter earnings as strong growth in group protection more than offset the continued decline in retail protection.

With the insurer completing the merger with Exide Life Insurance Co. during the quarter, analysts expect new business margins to remain unchanged in FY23 as guided by the management earlier.

They also expect improvement in the company’s reach, especially in the rural region, with its latest tie-up with India Post Payment Bank.

According to Emkay Global, the merger between Housing Development Finance Corp. and HDFC Bank Ltd. is expected to be the key driver for the insurer’s shares in the near term.

The private life insurer’s net profit rose 19% year-on-year but declined 9% sequentially in the quarter ended September. Its revenue rose 12% in the quarter.

Value of new business—present value of the future profits associated with new business written during the period—grew 19% to Rs 1,288 crore post merger for the half year ended September 2022. VNB margin for H1FY23 was at 26.2% against 26.4% a year ago. Pre-merger margins for six months ended September 2022 were higher at 27.6%.

Shares of the company eased 0.55% to Rs 538.6 apiece as of 11:25 a.m., while the Nifty 50 was 0.53% down on the NSE.

Of the 34 analysts tracking the company, 32 maintain a ‘buy’ while two suggest a ‘hold’, according to Bloomberg data. The 12-month consensus price target implies an upside of 26.6%.

Here’s what brokerages have to say about HDFC Life’s Q2 FY23/H1FY23 performance:

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