Brokerage Motilal Oswal Securities expects HDFC Standard Life to report a 34.9 per cent year-on-year rise in net profit to Rs 337.60 crore in the quarter ended December 31, from Rs 250.20 crore in the corresponding period a year ago. It sees SBI Life to report 16 per cent growth in profit to Rs 450 crore, from about Rs 390 crore in the year-ago period.
In the case of HDFC Life, the protection mix is expected to improve while the return on embedded value (RoEV) is seen staying at modest levels. For SBI Life, the protection business mix is seen improving and the company is expected to maintain its cost leadership, Motilal said.
For HDFC Life, YES Securities expects annual premium equivalent (APE) growth of 10.2 per cent to Rs 2,016.30 crore, led by growth in the protection segment and a 154-basis-point VNB margin expansion to 26.1 per cent, owing to a favourable product mix. NBP is seen rising 21.5 per cent year-on-year to Rs 5188.60 crore.
For SBI Life, YES Securities sees the annual premium equivalent declining 16 per cent YoY led by weakness in the credit protection business. That said, it sees VNB Margin expansion of 233 basis points YoY, driven by higher share in retain protection.
“HDFC Life is witnessing gradual recovery in its new business premium (NBP) and would reflect APE growth of 19 percent YoY. SBI Life would reflect tepid trends, with an APE decline of 1 per cent. Overall, we expect VNB growth of 25 per cent for HDFC Life and 13 per cent for SBI Life,” Motilal Oswal Securities said.
Emkay Global expects HDFC Life to report a 44.7 per cent rise in net profit to Rs 362.10 crore. This brokerage sees 7.8 per cent growth in profit to Rs 335.30 crore for SBI Life.
“We believe that HDFCL’s margin will improve to 26 per cent on scaling of Par product ‘Sanchay Par advantage’ as well as the gradual rise in share of protection products. We expect SBI Life to report a 3 per cent premium growth QoQ, supported by healthy traction in group premium and growth across products. We expect the VNB margin may expand for SBI Life to 19.5 per cent, helped by the launch of new products in FY20 in
annuity and non-par guaranteed products,” Emkay said.
CLSA said that while SBI Life was slow to start off post-pandemic, December data clearly points to improving new business momentum. The foreign brokerage said HDFC Life’s ability to drive innovation in margin-accretive, new products will continue to drive best-in-class VNB margins and RoEV.