Mehabe score: 5 G Factor: 3 Piotski Score: 5 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 5.
Description
HDFC Life Insurance Company is engaged in carrying on the business of life insurance. The Company offers a range of individual and group insurance solutions. The portfolio comprises of various insurance and investment products such as Protection, Pension, Savings,(Source : 202003 Annual Report Page No: 175)
Main Points
Started As Joint Venture
HDFC Life is incorporated as a JV between HDFC and Standard Life Aberdeen and is one of India’s leading life insurance companies#Site:HDFCLIFEMain Symbol:HDFCLIFE
Stock trades at 698.0, above its 50dma 688.12. It also trades above its 200dma 663.15. The stock remains bullish on techicals
The 52 week high is at 746.00 and the 52week low is at 555.95
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– is expected to give good quarter
Weakness
– Stock is trading at 16.34 times its book value
-Earnings include an other income of Rs.445.05 Cr.
-Promoter holding has decreased over last 3 years: -22.10%
Competition
– The industry trades at a mean P/E of 65.8x. ICICI Pru Life trades at the industry’s max P/E of 123.88x. HDFCLIFE trades at a P/E of 119.0x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 7.0. HDFCLIFE has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is -0.1%. The max 1- month return was given by ICICI Pru Life: a return of 8.11 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 14786.0 cr compared to Rs 14582.0 cr for period ended Jun 2020, a rise of 1.4%
Operating Profits reported at Rs 166.0 cr for period ended Jun 2021 vis-vis 444.0 for period ended Jun 2020 .
Operating Margins contracted -192.2 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 1.33 compared to Rs 1.58 for previous quarter ended Mar 2021 and Rs 2.23 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 71732.0 cr for period ended TTM vis-vis sales of Rs 71528.0 cr for the period ended Mar 2021, a growth of 0.3%. The 3 year sales cagr stood at 22.7%.
Operating margins shrank to 1.0% for period ended TTM vis-vis 2.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 1180.0 cr for period ended TTM vis-vis sales of Rs 1361.0 cr for the period ended Mar 2021, falling 15.3%.
Company reported a poor Net Profit CAGR of -2.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 9703.0 cr for period ended Mar 2021 vis-vis Rs 7388.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 15.0% compared to 19.0% over the last 3 Years. – The stock has given a return of 14% on a 1 Year basis vis-vis a return of 13% over the last 3 Years. – The compounded sales growth on a TTM bassis is 143% vis-vis a compounded sales growth of 30% over the last 3 Years. – The compounded profit growth on a TTM basis is -3% vis-vis a compounded profit growth of 2% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 25.67% vis-vis 24.85% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 9.2% vis-vis 9.16% for Dec 2020
Conclusion
– is almost debt free.
– is expected to give good quarter – Stock is trading at 16.34 times its book value
-Earnings include an other income of Rs.445.05 Cr.
-Promoter holding has decreased over last 3 years: -22.10%
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 688.12 and is trading at 698.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
