HDFC Life Q1 earnings preview: APE up 22% YoY to Rs 2,910 crore; VNB growth expected at 17%

HDFC Life Insurance Company is expected to report annualized premium equivalent (APE) of Rs 2,910 crore for the quarter ended June 30, 2024, up 22% year-on-year. However, the average estimate of three brokerages suggests that APE could decline by 40% sequentially.

The value of new business (VNB) is estimated at Rs 714 billion in Q1 2025, up 17% over the same period in the previous fiscal year.

HDFC Life is scheduled to announce its April-June quarter results on Monday, July 15.

Key areas to monitor going forward include product-level growth, particularly protection products and margin guidance for APE and VNB.

In the June quarter of the last fiscal, HDFC Life reported a consolidated net profit of Rs 41.67 crore, compared to a profit after tax (PAT) of Rs 41.16 crore in the previous quarter (January-March).

Here’s what brokerages recommend:

Nuvas

Nuvama expects HDFC Life to report annualized premium equivalent (APE) of Rs 2,910 crore for the quarter ended June 30, 2024, which is likely to be up 25% year-on-year but down 38% quarter-on-quarter. The company’s VNB for the quarter is estimated at Rs 710 crore, up 17% year-on-year but down 42% quarter-on-quarter. Meanwhile, VNB margin is expected to be 24.5%, down 168bps year-on-year and 161bps quarter-on-quarter.

Investors will likely focus on product-level growth, particularly protection, with FY25E and medium-term APE and VNB margin guidance set to be key investor focus, it said.

Kotak stock

Kotak estimates HDFC Life’s APE for the quarter at Rs 2,784 crore, which is likely to be up 19.6% YoY but down 41.1% QoQ. VNB is expected to be up 15% YoY at Rs 702 crore and down 43.1% QoQ. VNB margin for Q1FY25 is estimated at 25.2%, down 100bps YoY and 91bps QoQ.

Kotak said in a note that the 20% YoY APE growth for Q1FY25 is a low baseline and the two-year APE CAGR is likely to be lower at 16%. Margin compression is driven by higher volumes in low-margin ULIPs.

Yes Securities

Yes, APE is expected to grow 20% YoY to Rs 2,801 crore, down 41% QoQ. The value of new business is estimated at Rs 729 crore, up 19% YoY and down 41% QoQ. New business premium (NBP) is expected to grow 13% YoY to Rs 6,608 crore, down 31% QoQ.

“We have pencilled in new business growth assumptions up to May FY24 in line with the observed trend of -23%/-35% NBP/APE decline for HDFC Life over 2M1QFY25 (April-May FY24) and 2M4QFY24 (January-February FY24). We have pencilled in VNB margin contraction of -10bps QoQ on the back of expected business mix shift,” Yes said in a brokerage note.

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