HDFC Life Q2 results preview: Net profit likely to see double-digit growth; check details

Last week, the company informed in a stock exchange notification that a meeting of the board of directors of the company is scheduled to be held on October 15 to consider the “unaudited standalone financial results for the quarter ended September 30, 2024, and audited standalone financial results for the half‐year ended September 30, 2024”.

HDFC Life, founded in 2000, is a leading life insurance solutions provider offering a range of individual and group insurance solutions. The company’s insurance products encompass various categories, including protection, pension, savings, investment and health.

Q2FY25 result estimates

The investors and market experts will keep a close watch on the annual premium equivalent (APE) and the value of new businesses (VNB) in the Q2 earnings report. According to experts, HDFC Life is likely to post a 17-26% YoY rise in APE. The insurer’s APE could be in the range of ₹3,550 crore to ₹3,834 crore in the September quarter.

The value of new businesses is estimated to be between ₹900 crore to ₹978 crore in Q2FY25, as estimated by market observers. The company is expected to report a 12-22% YoY growth in VNBs. On the other hand, according to estimates by experts, APE could rise 24-34% sequentially while growth in VNBs could be between 25% and 36%.

Investors will also monitor the insurance firm's VNB margins. According to experts, they may drop by 100 bps to around 25% YoY in the September quarter. Market experts will also monitor the VNB margin guidance for FY25E and the medium term.

HDFC Life’s previous quarter performance

During the quarter ended June 2024 (Q1FY25), HDFC Life saw a 15% year-on-year jump in net profit to ₹479 crore from ₹417 crore in the year-ago quarter.

Its value of new business (VNB) increased 18% year-on-year (YoY) to ₹718 crore as against ₹610 crore in Q1FY24. The value of new business is a tool for evaluating the expected profitability of the new policies sold during the period.

The insurer’s VNB margins, however, contracted by 120 basis points to 25% in Q1FY25 due to a change in product mix. VNB margin is a measure of profitability for life insurance companies.

HDFC Life’s assets under management (AUM) expanded 22% to ₹3.1 lakh crore in the June quarter compared with ₹2.5 lakh crore in the year-ago period.

NCD issue

Last week, HDFC Life announced plans to raise ₹1,000 crore through non-convertible debentures (NCDs) to fund business growth.

The fund would be raised through unsecured, rated, listed, subordinated, redeemable, fully paid up, non-cumulative NCDs for an aggregate nominal value of ₹1,000 crore on a private placement basis. The debenture of tenure of 10 years would carry a coupon rate of 8.05% per annum.

HDFC Life share price

Ahead of the Q2 earnings announcement, HDFC Life shares are trading flat at ₹737 apiece, down 0.38% on the NSE.

The stock has gained 5.21% in the past five trading sessions and is up 21% in the past six months. However, it has underperformed the broader markets in the past one year, rising nearly 18% compared with an over 27% increase in the benchmark NIFTY during the same period.