EUR 120.00 For Business Accounts Only

MOSL: HDFC STANDARD LIFE (Buy)-In-line performance-operating metrics remain stable

HDFC Standard life: In-line performance; operating metrics remain stable

(HDFCLIFE IN, Mkt Cap USD10.9b, CMP INR385, TP INR475, 24% Upside, Buy)

 

• HDFCLIFE delivered a stable performance in 3QFY19, with shareholder profits growing 18.5% YoY to INR2.45b (our estimate: INR2.5b). Total un-weighted premium grew 27% YoY (11% YoY in APE terms), led by ~64% growth in single premium. In 9MFY19, the share of protection business increased to 16.6% in total APE, while it stood at 28.1% in un-weighted new business premium. New business margins stood at 24% (24.3% for 1HFY19), driving 25% YoY growth in VNB.
• Renewal premium growth stood at 18% YoY (22% YoY in 2QFY19), as 13th month individual persistency declined marginally to 82% (from 83% in 1HFY19). The share of ULIPs in individual APE stood stable at 59%, while the composition of non-par savings business increased sharply to 14% (11% in 1HFY19), aided by sharp growth in annuity business (4x growth in 9MFY19). HDFCLIFE continues witnessing significant potential in the annuity/protection business, and thus, expects a further improvement in the product mix, which should support profitability.
• Opex moderated to 13.8% (14.1% over 1HFY19), while commission expenses stood at 380bp v/s 450bp in 1HFY19. This reflects higher growth in the single premium business, the share of which has increased from 28% in 9MFY18 to ~36% in 9MFY19. Share of direct channel in individual APE stood at 17% v/s 14% in FY18.
• Other highlights: (i) HDFCLIFE further increased the size of its agency channel to >97K (20K agents added in 9MFY19). (ii) The bancassurance partner count increased sharply to 209 (170 partners in 2QFY19). (iii) Total AUM grew 13% YoY to INR1.18t with debt:equity mix of 62:38. (iv) Solvency ratio stood largely stable at 191%.