MOSL: HDFC STANDARD LIFE (Buy)-Better premium mix drives improvement in return ratios
HDFC STANDARD LIFE: Better premium mix drives improvement in return ratios
(HDFCLIFE IN, Mkt Cap USD11.5b, CMP INR399, TP INR475, 19% Upside, Buy)
- HDFCLIFE delivered a stable performance, with shareholder profits growing 5% YoY to INR3.6b. In 4QFY19, un-weighted premium increased 15% YoY (APE growth of 9% YoY), led by ~27% YoY growth in single premium. For FY19, total premium/PAT grew 23.8%/13.1% YoY to INR289b/INR12.5b.
- For FY19, the share of the protection business increased to 16.7% of total APE (7% on an individual APE basis). Margins improved to 24.6% (v/s 23.2% for FY18), driving 20% YoY growth in VNB to INR15.4b.
- Renewal premium growth stood at 13% YoY (17% YoY in FY19), as the persistency ratios held largely stable. The share of ULIPs in individual APE declined by 200bp YoY to 55%, while the composition of the non-par savings business increased sharply to 20% (+1100bp YoY), aided by sharp growth in the annuity business. HDFCLIFE continues seeing a significant potential in the annuity/protection business and expects a further improvement in the product mix, which should support profitability.
- Total commission and operating expenses growth moderated to 6.9% YoY (16.5% YoY for FY19) to INR16.1b, while the total expense ratio was at 15.6%. The share of direct channel in individual APE stood at 19% v/s 14% in FY18.
HDFC Life Insurance Company Ltd, formerly HDFC Standard Life Insurance Company Limited, is a life insurance company. The Company provides various individual and group insurance solutions across India. It offers a range of life insurance plans, such as term insurance plan, women's plan, health insurance plans, child education plans, unit linked insurance plans (ULIPs), and savings and investment plans. It operates through 13 segments: Participating Life (Individual & Group), Participating Pension (Individual & Group), Participating Pension Group Variable, Non Participating Life (Individual & Group), Non Participating Pension (Individual & Group), Non Participating Life Group Variable, Non Participating Pension Group Variable, Non Participating - Annuity, Non Participating - Health, Unit Linked - Individual Life, Unit Linked - Individual Pension, Unit Linked - Group Life and Unit Linked - Group Pension. It has approximately 410 branches in over 900 cities and towns in India.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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