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Subscribe to HDFC Standard Life Insurance Company IPO as a good long term investment

SPA Securities | 07 Nov, 2017  | Follow Author | Add to my Favourites 
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HDFC Standard Life (HDFC SL) 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 FY16 and FY17. Besides consistently being among the top three private life insurers in terms of profitability based on VNB margin, HDFC SL has also been consistently among the top three private life insurers in terms of market share based on total new business premium between FY15 and FY17. Total new business premium for FY15, FY16 and FY17 stood at INR 54.92bn, INR 64.87bn, ₹86.96bn respecitvely. Between FY15-17, annualized premium equivalent grew by a CAGR of 14.5%. 13th month individual persistency ratio was 73.3%, 78.9% and 80.9% for FY15, FY16 & FY17 respectively.

·         Strong financial performance defined by consistent and profitable growth


·         Growing and profitable multi-channel distribution footprint that provides market access across various consumer segments in India


·         Strong financial performance defined by consistent and profitable growth


·         Focus on customer centricity enabling growth across business cycles


Outlook & Valuation

HDFC SL has grown at a CAGR of 17.8% over the last 5 years in terms of NBP (9% for SBI life & ICICI Pru) enjoying 22% VNB margin. NBP in FY17 stood at ~INR 87bn. A strong parentage, highly profitable product mix, multi channel distribution, improved persistency and healthy return ratios (average 3 year ROE of 29.4%) makes the issue attractive from long term perspective.  At the upper end of the band at INR 290 HDFC Standard Life trades at 4.7x FY17 P/EV of INR, 124.1bn. We recommend SUBSCRIBE to the issue as a good long term investment.
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About SPA Securities

SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.


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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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