Motilal Oswal keeps Buy rating on HDFC Life and HDFC AMC after Q2 results

what happened

Motilal Oswal, as reported by Moneycontrol.com, kept its Buy rating on HDFC Life Insurance with a target of INR680, based on 1.8x FY28E embedded value. Annual premium equivalent (APE) came in at INR47.3b, in line with expectations and up 13% year on year, with individual APE up 11% and group APE up 25%. Absolute value of new business (VNB) rose 15% to INR11.6b, and the VNB margin reached 24.5% against 24.1% a year earlier.

For the first half of FY27, APE grew 11%, VNB rose 12% and shareholder profit increased 14% to INR5.1b. Embedded value at the end of the half-year stood at INR664.6b, with operating RoEV of 14.9%. The brokerage said the VNB margin should benefit from scale, though much of the upside is likely to be reinvested in capabilities.

Motilal Oswal also reiterated its Buy rating on HDFC AMC with a target of INR2900, based on 40x FY28E core EPS. Operating revenue grew 14% year on year and 6% quarter on quarter to about INR11.7b, in line with forecasts. EBITDA reached INR9.3b, a 5% beat driven by lower opex, and the EBITDA margin rose to 79.5% from 77.9% a year earlier.

why it matters

Both companies broadly matched analyst expectations, so estimates were little changed. For investors, the key watch points are the VNB margin trend at HDFC Life and cost discipline at HDFC AMC. The brokerage expects revenue, EBITDA and profit to grow at roughly 13% to 14% a year over FY26 to FY28.

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