HDFC Life Insurance Company share cost has rallied more than 3 per cent so far in September. Last week, HDFC Life Insurance Company announced the acquisition of Exide Life Insurance Company for Rs 6,687 crore. HDFC Life is amongst the most dominant players in the Indian life insurance coverage business with a healthful distribution network. Analysts see practically 20 per cent rally in HDFC Life Insurance Company stock cost from Monday’s close. On Monday, the stock surged to a day’s higher of 743.25 and fell to a low of Rs 728.80 apiece. At least 3 brokerage and study firms have suggested to ‘buy’ the stock.
ICICI direct Research
Rating: Buy, Target: Rs 850 Upside: 15.6%
The domestic study firm believes that with the acquisition of Exide Life, expansion in terms of geography (tier II and III regions), buyers and distribution (agency channel) remains positive. Pre-overrun margin related to HDFC Life is positive, although the focus will be on enhancing price matrix and persistency, it stated. Given low marketplace share, flattish enterprise and low persistency, price of acquisition at Rs 6687 crore i.e. 2.5x EV is not low-cost. “Overall, we expect this merger to increase EVPS for FY23E by 8% to Rs 183 per share,” ICICI direct study stated. The firm has revised up its target to Rs 850 from Rs 800 earlier by valuing the firm at 4.4x FY23E EV.
Emkay Global Financial Services
Rating: Buy, Target: Rs 870, Upside: 18.36%
The brokerage firm has pegged a 12-month target at Rs 870 apiece, implying a 18.36 per cent rally. It noted that the valuation premium of Rs 4000 crore more than the EV of Exide Life implies 3 per cent of HDFC Life’s existing marketplace cap. However, the valuation of 2.5x P/EV for a franchise with no any material banca distribution sets an expectation benchmark for other such struggling organizations.
Philip Capital
Rating: Buy, Target: Rs 775, Upside: 5.4%
The deal values Exide life at 2.5x existing EV, which Philip Capital believes to be on a greater side as Exide life provides tiny provided their smaller sized size and massive element of synergies is probably to come since of scale that HDFC Life brings. EV per share for HDFC Life is anticipated to enhance by 5 per cent, the brokerage firm has retained its get rating for the stock.
Motilal Oswal Financial Services
Rating: Neutral, Target Rs 750, Upside: 2%
The Life Insurance business in India is a extremely fragmented marketplace, with a total of 23 private players and the government-owned LIC. The transaction values Exide Life at 2.5x Jun’21 reported EV, which seems pricey in the context of Exide life’s 3-year premium and EV CAGR of 10% and 8%, respectively. Motilal Oswal Financial Services’ EV per share estimates on HDFC Life are probably to enhance by 2.5%/2% more than FY22/FY23E as the transaction is completed.
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