HDFC Life Insurance: Margin excitement APE growth of 12% will lead to 14% VNB growth in FY27F; favorable valuations; upgrade to Buy

Research evidence excerpt

HDFC Life Insurance: Margin excitement APE growth of 12% will lead to 14% VNB growth in FY27F; favorable valuations; upgrade to Buy

Global Markets Research

HDFC Life Insurance HDFL.NS HDFCLIFE IN 16 July 2026

EQUITY: FINANCIALS

RatingMargin excitement Up from Neutral Buy

Target priceAPE growth of 12% will lead to 14% VNB growth in Increased from INR 730FY27F; favorable valuations; upgrade to Buy INR 725

1Q27 VNB margin beat by 100bp; GST cut related drags for one more quarter Closing15 July 2026price INR 569

• HDFC Life reported a VNB margin of 25% in 1Q27 vs 24.2% reported in FY26.

Implied upside Further, the company beat our estimate by100bp, driven by healthy growth in all +28.3%

product segments except par (down 50% y-y), which compensated for some part of

Market Cap (USD mn) 12,834.2

the fixed-cost-absorption-related drags. ADT (USD mn) 35.0

• Reported margins also included a 60bp drag from the GST cut (Fig.7). Management

has indicated another 60bp of drag to get consumed in next quarter. Relative performance chart

Banca channel still slow; encouraging trends in agency channel

• The price war in the banca channel was a key drag on HDFC LIfe’s performance in

FY26. Management indicated that competitive intensity is far more comfortable now

vs FY26. However, banca channel growth remained tepid at 2% y-y only.

• The company’s focus on the non-banca channel is a positive, in our view, with both

agency and direct channel reporting 19-20% y-y growth in individual APE in 1Q27.

Management has indicated that new branches opened for the agency channel are

mostly in tier 2/3 cities, thus advancing on its plan to penetrate deeper markets.

We build only 12% APE growth but 14% VNB growth for FY27F

Source: LSEG, Nomura