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You are here : IndiaNotes >> Research & Analysis >> IPOs >> HDFC Standard Life Insurance Company IPO

HDFC Standard Life Insurance Company IPO: Subscribe on the issue for long term

Hem Securities | 07 Nov, 2017  | Follow Author | Add to my Favourites 
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Co is one of the most profitable life insurers, based on Value of New Business (VNB) margin, among the top five private life insurers in India (measured on total new business premium) in Fiscal 2016 and Fiscal 2017, according to CRISIL. Besides con-sistently being among the top three private life insurers in terms of profitability based on VNB margin, co have also con-sistently been among the top three private life insurers in terms of market share based on total new business premium between Fiscal 2015 and Fiscal 2017, according to CRISIL. Co is one of the first private life insurance company to register in India and was established as a joint venture between HDFC (one of India’s leading housing finance institutions) and Stand-ard Life Aberdeen plc (one of the world’s largest investment companies), initially through its wholly owned subsidiary The Standard Life Assurance Company and now through its wholly owned subsidiary, Standard Life Mauritius. Co’s focus is on cre-ating a multi-channel distribution platform has resulted in its market share among private life insurers in India in terms of total new business premium increasing from 15.8% in Fiscal 2015 to 17.2% in Fiscal 2017, according to CRISIL

Investment Rationale

Co have a healthy balance sheet with total net worth of Rs 44.6 billion and a solvency ratio of 200.5% as at September 30, 2017, above the minimum 150.0% solvency ratio required un-der IRDAI regulations. Co generated Profit After Tax of Rs 8,869.2 million and delivered a Return on Equity of 25.6%, Re-turn on Invested Capital of 40.7% and Operating Return on Embedded Value of 21.7% during Fiscal 2017. As at September 30, 2017, co had total AUM of Rs 995.3 billion and Indian Em-bedded Value of Rs 140.1 billion. Co’s number of major bancas-surance partners grew from 31 as at March 31, 2015 to 125 as at September 30, 2017. Co’s top 15 bancassurance partners (in terms of total new business premium sourced for the period ended September 30, 2017) had over 11,200 branches across India as at September 30, 2017. Co had 66,372 individual agents as at September 30, 2017, which comprise 6.8% of the all private agents in the Indian life insurance industry. Co have a pan-India presence, comprising 414 branches and spokes across India as at September 30, 2017.


Company is bringing the issue at price band of Rs 275-290 /share. At upper band, co is trading at P/EV multiple of 4.2x which is higher .Although co has strong parentage with strong fundamentals but looking after valuation, we recommend "Subscribe” on issue for long term.

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About Hem Securities
The Hem Securities is one of the leading broking Network in India. It provides trading platform in all the leading exchanges namely - BSE, NSE, MCX , NCDEX & MCX-SX. Their mission is to build wealth for their investors by offering them best financial services through trading & investment strategies and honoring commitment with ethical & transparent business practices.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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