Motilal Oswal Maintains Buy Recommendation for HDFC Life Insurance, Sees Target of Rs 760

HDFC Life Insurance Reports In-Line Q4FY26 Results

HDFC Life Insurance (HDFCLIFE) has reported an Annual Premium Equivalent (APE) of INR52.5 billion in 4QFY26, marking a 1% year-over-year (YoY) increase. This growth was driven by a 10% YoY expansion in group APE, while individual APE remained flat YoY. For the fiscal year 2026, HDFCLIFE's APE grew 8% YoY to approximately INR166.4 billion.

In terms of Value of New Business (VNB), HDFCLIFE reported a decline of 8% YoY to INR12.6 billion in 4QFY26, resulting in a VNB margin of 24%. This compares to a VNB margin of 26.5% in 4QFY25, in line with the estimated 24.8% margin. For FY26, VNB grew 2% YoY to INR40.3 billion, leading to a VNB margin of 24.2%, down from 25.6% in the previous fiscal year.

As of the end of FY26, HDFCLIFE's Embedded Value (EV) stood at INR621.4 billion, representing a 12% YoY increase. The insurer's operating Return on Embedded Value (RoEV) for the year was 15%. With a largely completed Goods and Services Tax (GST) transition, a supportive yield curve, an improving agency channel, and a strengthening protection portfolio, HDFCLIFE is well-positioned to enter FY27.

Read also: Expert Portfolio Manager Raja Venkatraman Names Top Investment Picks for June 4

Outlook and Recommendations

We have maintained our premium estimates for HDFCLIFE but have reduced our Value of New Business (VNB) margin estimates by 150 basis points for FY27 and 100 basis points for FY28. This adjustment takes into account the 4QFY26 performance and the fact that the operating RoEV is near 15%. Based on these estimates, we reiterate our BUY rating with a revised target price of INR760, which is based on 2 times FY28 Estimated Embedded Value (EV).

Comparison of HDFCLIFE's APE and VNB Growth

Read also: MarketSmith India's 4 June Stock Recommendations