HDFC Life plunges 9%, recover; ICICI Pru, SBI Life also decline; here are target prices

Shares of life insurers including HDFC Life Insurance Company Ltd, ICICI Prudential Life and SBI Life fell up to 9 per cent in Monday's trade amid heavy turnover. HDFC Life saw its shares falling 9.37 per cent to Rs 688.15 at open. It, however, recover and was later trading 0.55 per cent lower at Rs 755.10.

SBI Life Insurance Company Ltd declined 1.2 per cent to Rs 1,763.70. ICICI Prudential Life Insurance Company Ltd edged 0.41 per cent lower at Rs 599.25. Life Insurance Corporation of India also fell 0.48 per cent to Rs 900.85. The stocks fell as Q2FY26 numbers will be hit as ITC is not available, even as analysts see strong H2 ahead.

"Private life insurers have seen tepid growth in 5MFY25; expect Sep-25 volumes to remain subdued till the period of GST exemption kicks in. We expect the share of ULIP to keep moderating as demand shifts to the non-linked segment. Expect 2QFY26E VNB margins to be range-bound as we await clarity on the impact of GST exemption. Valuations continue to remain undemanding. Maintain Buy on Max Financial (target of Rs 1,850) and HDFC Life (target: Rs 900. Key monitorable from 2QFY26E results are: (1) Growth guidance for FY26/ FY27E (2) Margin outlook and impact of GST exemption," PL Capital said.

MOFSL said the life insurance sector in India is entering 2HFY26 with significant tailwinds, including the GST waiver, which, while creating near-term margin pressures from loss of input tax credit (ITC), should structurally aid penetration; the anticipated rate-easing cycle, which will be a driver for stronger non-par and annuity growth; and improving mix towards protection and non-par, which will drive VNB margin expansion.

"A product mix shift was observed in 1QFY26 towards non-linked categories, with ULIP share declining 460bp/360bp/600bp YoY for ICICI Pru/SBI Life/Max Financial. We expect this trend to accentuate going forward, with interest rates declining and customers looking to lock long-term interest rates," MOFSL said. 

The brokerge said VNB margins improved 10-260bps YoY in Q1FY26 across private players, led by higher yielding non-par and protection, offsetting ULIP softness. It expects the momentum to get stronger in 2HFY26, aided by a favorable mix away from ULIPs, non-par/ annuity accretion, and a low base, as H2FY25 margins were diluted by revised surrender charge norms. 

"However, 2QFY26 numbers will be hit as ITC is not available, and any action to counter the same will be implemented in due course. The GST waiver improves affordability and penetration, though insurers face short-term margin pressure from the ITC loss. EV impact remains contained (

Within the sector, MOFSL upgraded Max Financial to 'Buy', given industry-leading growth, the highest non-par savings mix (33 per cent of APE), and sharp margin expansion (up 260 bps YoY to 20.1 per cent).

Strong banca traction, steady agency expansion, and management’s guidance of 24-25 per cent margins in FY26, along with potential structural upside from the reverse merger, reinforce our conviction. We value Max Life at 2.2x Sep-27E EV and adjusting for 80 per cent stake of Max Financial, we arrive at a target of Rs 2,000.

MOFSL said it also prefers HDFC Life within the space, given its strong track record of delivering consistent growth across regulatory changes and healthy profitability.