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    HDFC Life Q1 results preview: Up to 36% fall in profit likely

    Synopsis

    Given the stringent lockdown, the life insurance industry's new business profit was down 31 per cent YoY in April and 27 per cent in May. Analysts are largely expecting a very dull earnings season for insurance players.

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    Nirmal Bang Institutional Equities sees profit at Rs 307.30 crore, down 27.6 per cent YoY. It sees a 40 per cent de-growth in new business profit (NBP) at Rs Rs 2,355 crore.
    NEW DELHI: HDFC Life, which will replace Vedanta in Nifty50 effective July 31, is likely to announce a 21-36 per cent fall in net profit for the June quarter on a 30-50 per cent drop in gross written premium (GWP).

    Given the stringent lockdown, the life insurance industry's new business profit was down 31 per cent YoY in April and 27 per cent in May. Analysts are largely expecting a very dull earnings season for insurance players.

    "Our general thesis presently is that HDFC Life’s product mix places it in a much better position from a growth standpoint compared to SBI Life, ICICI Pru Life and Max Life," said Nirmal Bang Institutional Equities.

    Emkay Global expects HDFC Life to report a 35.75 per cent YoY decline in net profit at Rs 273.50 crore compared with Rs 425.70 crore in the same quarter last year. GWP is seen falling 30.5 per cent to Rs 4,545 crore from Rs 6,535.80 crore. Annual premium equivalent (APE) is expected to drop 33.9 per cent to Rs 1,047.90 crore while value of new business (VNB) margin is seen shrinking to 26.6 per cent, down 330 basis points over 29.8 per cent YoY.

    "We believe that HDFC Life’s margin will improve to 26.5 per cent on scaling of Par product ‘Sanchay Par advantage’ as well as the gradual rise in protection products," Emkay said.

    Par or participating policies share the profits of the insurance company with policyholders in the form of bonuses or dividends.

    Sharekhan expects HDFC Life to report a 21.4 per cent decline in net profit at Rs 335 crore while it sees GWP falling 49.3 per cent to Rs 5,306 crore.

    "We expect the company to report in line premium growth, but going forward, operating costs and strategy on growth will be keenly watched out for. Treasury gains are expected during the quarter," Sharekhan said.

    Nirmal Bang Institutional Equities sees profit at Rs 307.30 crore, down 27.6 per cent YoY. It sees a 40 per cent de-growth in new business profit (NBP) at Rs Rs 2,355 crore.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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