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  • 21 Oct 2022
  • ICICIdirect Research

HDFC LIFE’S PREMIUM GROWTH REMAINED ON A SLOWER TRACK. CONSOLIDATION OF EXIDE EFFECTIVE

HDFCLIFE - 640 Change: -17.55 (-2.67 %)

News:

·  Exide Life merger completed on October 14, 2022 and Q1FY23 numbers are restated. Hence YoY and QoQ numbers are not comparable

· On a pre-merger basis, new business premium grew at slower pace at 5% YoY at Rs 10923 crore in H1FY23 and new business margin stood at 27.6% vs 26.4% in H1FY22. Including Exide, H1FY23 new business premium is reported at Rs 11325 crore. Individual WRP market share declined by 140 bps YoY to 14.8%

· Total APE (pre-merger) registered a growth of 11% YoY at Rs 4549 crore for H1FY23, in-line with industry growth. Merged total APE at Rs 4914 crore

· Non-par saving products now form 37% vs 32% in H1FY22, while annuity business contributes 7% vs 5% a year ago

· Opex ratio increased ~230 bps YoY from 12% to 14.3%. On merged basis, opex ratio stands at 14.7%

· AUM was at Rs 204392 crore, up 7% YoY. Debt to equity mix in AUM was at 68:32 with ~99% of debt investments in G-secs and AAA bonds. Including Exide, AUM stood at Rs 224901 crore

·  Persistency ratio improved with 13th month persistency at 88% and 61st month persistency at 54% versus 86% and 52% in H1FY22, respectively

· Indian embedded value was at Rs 33020 crore as of Sept 2022, up 15% YoY. Solvency ratio was at 2.1x. Merged IEV at Rs 36016 crore

View:

 Slower accretion in business remains an overhang. However, given under-penetration and focus of HDFC Life on diversified mix and VNB margin bodes confidence. Synergy benefit from Exide Life to be watched.

Impact:

Neutral.