Buy HDFC Life Insurance: target of Rs 850: Sharekhan

Sharekhan is bullish on HDFC Life Insurance has recommended buy rating on the stock with a target price of Rs 850 in its research report dated January 14, 2021.

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Sharekhan’s research report on HDFC Life Insurance

We expect the Union Budget to provide favourable policy steps for the insurance industry; Possible steps may include providing a separate limit over and above the already available 80C limits and providing tax benefits to pension schemes (a la NPS) etc, HDFC Life being largest player is likely to benefit from tailwinds. Latest figures for HDFC Life indicates strong traction; NBP up 18.8% YoY / 11% y-o-y for Q3FY2021 / 9MFY2021. HDFC Life is attractive due to its strong business franchise, backed by favourable product/distribution mix, high bancassurance share, and robust margins.

Outlook

The stock trades at 5.0x/4.2x its FY2022E/FY2023E EVPS; well-diversified product bouquet is a positive; we maintain Buy with a revised PT of Rs. 850.

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