HDFC Life Q1 Results Preview: APE up 22% YoY to Rs. 2,910 crore, VNB growth of 17%

HDFC Life Insurance Company has reported a 22% year-on-year increase in its annual premium equivalent (APE) for the quarter ended June 30, 2024 to Rs. 2,910 crore is expected. However, on a sequential basis, APE can increase by 40 percent. % decline as per average estimate of three brokerages.

Its new business (VNB) for Q1FY25 was valued at Rs. 714 crore is estimated, which represents an increase of 17% over the corresponding period of the previous financial year.

HDFC Life will announce its April-June quarter results on Monday, July 15.

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

In the June quarter of last fiscal, HDFC Life posted Rs. 416.7 crore, while in the previous quarter i.e. January-March profit after tax (PAT) was Rs. 411.6 crore was recorded.

Here’s what the brokerage recommends:

Nuwama

Nuwama expects HDFC Life for the quarter ended June 30, 2024 to post Rs. 2,910 crore will report an annualized premium equivalent (APE), a likely 25% YoY jump, but a 38% climb on a QoQ basis. The company’s VNB for the reporting quarter stood at Rs. 710 crore is estimated, which is a 17% YoY jump but a 42% QoQ decline.

Meanwhile, VNB margin is seen at 24.5%, down 168 bps on YoY basis and 161 bps on QoQ basis.

According to him, investors will look out for production-level growth, especially protection. APE and VNB margin guidance will be the key investor focus for FY25E and the medium term, it said.

Kotak Equities

Kotak said HDFC Life’s APE in the aforementioned quarter stood at Rs. 2,784 crore, which is likely to grow 19.6% YoY, while falling 41.1% QoQ. VNB Rs. 702 crore, which is a 15% YoY gain, while a 43.1% QoQ loss. VNB margin is estimated at 25.2% in Q1FY25, down 100 bps and 91 bps on a QoQ basis.

20% YoY APE growth in 1QFY25 is on a low base and 2-year APE CAGR is likely to remain low at 16%, Kotak said in a note. Margin compression will be on higher volumes in low margin ULIPs.

Yes securities

Yes expects APE to grow at 20% p.a. to Rs. 2,801 crore will be. It will decline by 41% on QoQ basis. The value of the new business is Rs. 729, up 19% YoY and down 41% QoQ. New Business Premium (NBP) is expected to grow by 13% YoY to Rs 6,608 crore. However, this would be a 31% reduction.

“We pencil in new business growth assumptions based on observed trends till May 2024, when HDFC Life projects NBP/APE de-growth of -23%/-35% for 2M1QFY25 (April and May 2024) over 2M4QFY24 (January and February 2024). We pencil in a VNB margin contraction of -10bps QoQ based on expected business mix changes,” Ha said in a brokerage note.

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