Shares of HDFC Life Insurance Company were shooting up ahead of fourth-quarter results after a global brokerage hiked its ratings on the stock.

What Happened: HDFC Life Insurance Company received an upgrade from Citi, which raised its ratings on the stock to “buy” and set a target price of ₹720 per share, which translates to an upside of 19% from the last closing price.

Citi’s upgrade is based on HDFC Life’s recent underperformance compared to both its listed peers and the Nifty 50 over the past year.

Citi believes that HDFC Life’s efforts to expand its agency base in FY24 will positively impact its earnings. The brokerage also expects that a potential growth revival at HDFC Bank could further benefit HDFC Life.

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HDFC Life is projected to report a modest single-digit growth in net profit for the January-March quarter despite strong premium income.

Analysts attribute this to competition and market shifts towards low-margin products affecting profit margins. The consensus among analysts predicts a 6.1% year-on-year growth in HDFC Life’s Q4 net profit to ₹382.1 crore due to a slowdown in the value of new business (VNB).

The company’s gross premium income is anticipated to grow by 16% year-on-year to ₹22,740 crore. This growth is mainly driven by a significant 48.6% increase in renewal premiums.

Price Action: HDFC Life’s share price was up 2.33% at ₹618.70 in early trade on Thursday. The stock has given up 4.62% so far this year, trading mostly flat since June 2023.

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