HDFC Life Q1: VNB, margins beat Street, while premium growth trails estimates

HDFC Life Insurance delivered a resilient June-quarter performance, with value of new business (VNB) and VNB margins exceeding CNBC-TV18 estimates even as premium growth remained broadly in line with expectations. The insurer continued to strengthen its value-focused product mix, supported by robust growth in its protection business and improving traction across distribution channels.

For the quarter ended June 30, new business premium rose 12% year-on-year to ₹8,143 crore, marginally below the CNBC-TV18 poll estimate of ₹8,433 crore.

Annualised Premium Equivalent (APE) increased 8.8% to ₹3,515 crore, ahead of estimates, while retail APE grew 6.9% to ₹2,969 crore, also beating expectations.

The insurer reported VNB of ₹879 crore, up 8.5% from a year ago and ahead of the CNBC-TV18 poll estimate of ₹842 crore. VNB margin remained steady at 25%, compared with the Street expectation of 24.3%.

Ahead of the earnings announcement, shares of HDFC Life Insurance Company closed 2.2% higher at ₹567.20 on the NSE.

Protection business remains a key growth driver
Managing Director and CEO Vibha Padalkar said growth during the quarter was led by the company’s proprietary distribution channels, particularly agency and non-bank alliances, which expanded 17%, outpacing the industry. She acknowledged that growth through the bancassurance channel was relatively moderate but said the company’s share at partner banks improved as the quarter progressed and is expected to normalise further in the coming months.

“Growth during the quarter was underpinned by strong customer acquisition, with the number of policies growing in double digits and ahead of industry. Our product mix also continued to improve,” Padalkar said.

The protection franchise remained a standout performer, with retail protection APE rising 42%, while retail sum assured increased 31% year-on-year. The retail protection mix expanded by nearly 200 basis points to 8%, with protection products, including riders, now accounting for almost 11% of the retail portfolio.

Margins stay resilient

Executive Director and CFO Niraj Shah said the company’s focus on profitable growth continued to support margins despite changes in the tax regime.
“New Business margin for the quarter was 25%. Excluding the impact of GST, the margin would have been 25.6%, compared with 25.1% in the same period last year,” he said.

Shah added that profit after tax rose 12% year-on-year to ₹611 crore, while underlying profit growth, excluding the GST impact, stood at 17%. During the quarter, assets under management crossed ₹4 lakh crore, while assets managed across HDFC Life and its wholly owned pension subsidiary exceeded ₹5.7 lakh crore, marking another milestone for the insurer.