HDFC Life shares up 3% after bulk deal by Abrdn; what's next for this insurance stock?

Shares of HDFC Life Insurance Company were on the radar of investors on Wednesday amid the bulk deal buzz by its promoter Abrdn, who was reported to offload its entire remaining stake in the company. The heavy volumes at the exchanges suggest that the deal had taken place, but Business Today could not ascertain the details of buyers.

UK-based global investment company Abrdn, a promoter group entity, was looking to sell its entire remaining stake in HDFC Life Insurance amounting to 1.66 per cent equity via a block deal. Abrdn is likely to sell 3.57 crore shares in the range of Rs 563-585 per share.

About 3.6 crore shares amounting to more than Rs 2,080 crore of HDFC Life Insurance exchanged hands on BSE, while 37.77 lakh shares of the company worth Rs 223.33 crore were traded on the National Stock Exchange (NSE). The details of the buyers and sellers will be out after the market hours.

Shares of HDFC Life Insurance Company surged about 3 per cent to Rs 602.75 on Wednesday before giving up its gains partially to Rs 691.30 at 9.45 am. The company was commanding a market capitalization of little more than Rs 1.27 lakh crore. The stock settled at Rs 585.45 on Tuesday.

Abrdn has been paring its stake for quite some time, and with this stake sale, it will exit HDFC Life Insurance, eliminating the hangover of more block deals in the company. Recently, the Reserve Bank of India (RBI) allowed HDFC Bank or HDFC to increase the shareholding in HDFC Life Insurance and HDFC ERGO to more than 50 per cent.

HDFC Life Insurance has reported a net profit of Rs 359 crore for the January-March period. The profit growth is flat compared with Rs 357 crore in the same period last year. The private life insurer's net premium income came in at Rs 19,426 crore for the March quarter, 36 per cent higher compared with Rs 14,290 crore in the same period last year.

KR Choksey gave its target price of Rs 650 for the stock in April as it saw the company continue to see healthy traction in new products and expect to see improvement in the share of the Non-Par and Annuity segments, leading to a moderation in the ULIP mix.

Emkay Global upgraded HDFC Life Insurance to buy with a target price of Rs 650. "The relatively clearer outlook for HDFC Life, at a time when listed peers are facing certain specific challenges of their own, implies that its premium valuation versus peers would sustain," it said.

HDFC Life Insurance Company clocked an APE of Rs 5,160 crore in 4QFY23, an increase of 54 per cent YoY. Individual APE, at Rs 4,570 crore, was up 60 per cent YoY. Going ahead, HDFC Life aspires to grow faster than the industry, said B&K Securities, maintaining a 'buy' rating on the stock with a revised target price of Rs 612.

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