HDFC Standard Life Insurance BUY CMP: Rs480 TP: Rs510
HDFC SL showed robust performance in APE growth at 46% YoY for 9MFY18 much above our expectations (Ple: 35% YoY for FY18E) led by ULIPs. However margins remained flat at 22.2% for 9MFY18 in spite of better growth in protection business (27.3% share of total new business premium). Management spoke of increased competition in this business going ahead as more players have started tapping this segment and the company is now facing cost pressures is acquiring business. We have revised the APE growth estimates slightly. We maintain our recommendation of a BUY, and revise our TP to Rs500 (from Rs430) and value it at Rs996 bn (from Rs85 bn) translating to 4.2x FY20E EV.
n APE growth was quite robust compared to peers: HDFC SL’s individual APE growth for 9MFY18 was robust at 46% YoY growth mainly led by ULIPs (72.2% YoY growth for 9M). Participating segment slowed down for the company this quarter with growth at ~11% YoY for 9M. Thus there was change in mix skewed towards ULIP at 59% (50% in 9MFY17) and par at 28% (37% in 9MFY17). However, management is comfortable with ULIP share at 55% of overall APE mix.
n Protection business to drive profitability but faces some competition: HDFC SL has been growing its protection business with the help of 139 banca partnerships and has created niche for itself in this segment. Protection business constitutes 11.6% on APE basis (9.1% in 9M17) and 27.3% on new premium basis (24.2% in 9M17). However, lately company has been facing competition from other private players mainly on acquisition pricing front. Since there is no exclusivity with most banca partners, company may face cost pressures.
n Operating metrics improved slightly; margins remain stable: HDFC SL’s persistency improved in all the buckets except 61st on account of some business done in FY13. However, the same will also improve as company has focused on selling products according to customer needs. Opex ratio for the company was slightly higher than peers and shall remain so as company invests in increasing profitable agency channel and also on technology front whose benefits will reflect later. Increase in credit protection business has led to increase in opex ratios which will moderate going ahead. Margins for the company remain stable at 22.2% for 9M18 (22% in FY17) and is sustainable at these levels.
HDFC SL showed robust performance in APE growth at 46% YoY for 9MFY18 much above our expectations (Ple: 35% YoY for FY18E) led by ULIPs. However margins remained flat at 22.2% for 9MFY18 in spite of better growth in protection business (27.3% share of total new business premium). Management spoke of increased competition in this business going ahead as more players have started tapping this segment and the company is now facing cost pressures is acquiring business. We have revised the APE growth estimates slightly. We maintain our recommendation of a BUY, and revise our TP to Rs500 (from Rs430) and value it at Rs996 bn (from Rs85 bn) translating to 4.2x FY20E EV.
n APE growth was quite robust compared to peers: HDFC SL’s individual APE growth for 9MFY18 was robust at 46% YoY growth mainly led by ULIPs (72.2% YoY growth for 9M). Participating segment slowed down for the company this quarter with growth at ~11% YoY for 9M. Thus there was change in mix skewed towards ULIP at 59% (50% in 9MFY17) and par at 28% (37% in 9MFY17). However, management is comfortable with ULIP share at 55% of overall APE mix.
n Protection business to drive profitability but faces some competition: HDFC SL has been growing its protection business with the help of 139 banca partnerships and has created niche for itself in this segment. Protection business constitutes 11.6% on APE basis (9.1% in 9M17) and 27.3% on new premium basis (24.2% in 9M17). However, lately company has been facing competition from other private players mainly on acquisition pricing front. Since there is no exclusivity with most banca partners, company may face cost pressures.
n Operating metrics improved slightly; margins remain stable: HDFC SL’s persistency improved in all the buckets except 61st on account of some business done in FY13. However, the same will also improve as company has focused on selling products according to customer needs. Opex ratio for the company was slightly higher than peers and shall remain so as company invests in increasing profitable agency channel and also on technology front whose benefits will reflect later. Increase in credit protection business has led to increase in opex ratios which will moderate going ahead. Margins for the company remain stable at 22.2% for 9M18 (22% in FY17) and is sustainable at these levels.
The commodity tips and gold and silver tips provides by epic research with amazing profits. Traders can gain good amount of profit by the best trading tips.
ReplyDeleteTechnical Strategies showed here with best example. Nice to read daily
ReplyDeleteFree Stock Tips