HSBC has reiterated a ‘Buy’ rating on HDFC Life with a target price of ₹750 following the company’s Q3FY25 results. The brokerage highlighted that sequential margin improvement exceeded expectations, with the impact of new surrender value norms limited to around 30 basis points. HDFC Life maintained its FY25 growth guidance and is focusing on acquiring new customers and strengthening distribution channels, which HSBC believes will support future growth.
The brokerage expects margins to have bottomed out, citing several reasons: the incremental mix change toward low-margin linked products is slowing, sales of credit protection are improving, and margins are likely to benefit from a rate-cut cycle as they are negatively correlated with interest rates. HSBC sees these factors as positioning HDFC Life for sustained profitability and growth.
HDFC Life Q3FY25 Results:
HDFC Life reported a solid Q3FY25 performance. Total APE grew by 11.9% year-on-year to ₹3,569 crore, while Retail APE rose 12% to ₹3,122 crore. VNB increased by 8.6% to ₹930 crore, supported by a better product mix. However, VNB margins contracted slightly to 26.1% compared to 26.8% in the same period last year, primarily due to the impact of new surrender norms, which limited the sequential margin decline to 30 basis points.
The company maintained its FY25 growth guidance and continues to focus on expanding its customer base and deepening distribution channels.
