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Nomura downgrades HDFC Life to neutral, target price Rs 600

Neutral HDFC Life Insurance Company Ltd. at a price target of Rs 600.0 .

Updated: Oct 29, 2019, 09.12 AM IST
Nomura has downgraded HDFC Life Insurance Company to neutral in the long term from buy with a target price of Rs 600. Shares of HDFC Life ended up 1.50% at Rs 619.65 on Sunday at Muhurat trading while the BSE Sensex closed 192.14 points up at 39,250.20.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 225.06 crore, down 37.53% from last quarter sales of Rs 360.26 crore and down 5.19 % from last year same quarter sales of Rs 237.38 crore. The company has reported net profit after tax of Rs 308.98 crore in the latest quarter.

Investment Rational

The brokerage expects long-term value of new business (VNB) margin of 30% and return on embedded value of 21% for HDFC Life led by continuous product innovations. But with the stock rerating over 50% over the past six months, valuations have inched up to 4.6 times FY21 EV and around 35 times FY21 VNB, which are demanding, said Nomura.

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