Why HDFC Life Shares Are Dipping Even As Q4 Profit Beat Estimates

HDFC Life‘s share price remained upbeat as the insurer posted its results for the quarter ending March 2024.

What Happened: HDFC Life posted a 14% growth in its consolidated net profit for the quarter ending March, reaching ₹412 crore compared to the ₹362 crore reported in the same period last year. The bottomline was above market estimates of around ₹380 crore. The net premium income also saw an uptick, rising by 5% to ₹20,534 crore from 19,469 crore in the year-ago period.

The company’s has also proposed a final dividend of ₹2 per share for the year ended March 2024. Record date for the dividend payment is set for June 21, with the payment scheduled to be made on or after July 20.

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However, HDFC Life’s annualised premium equivalent (APE) declined by 8% for the quarter, reaching ₹4,727 crore compared to ₹5,162 crore in the same period last year. APE is a crucial metric used to measure the new business written by a life insurance company. It’s calculated by adding the initial premium from new annual-premium policies to one-tenth of the premiums from new single-premium policies.

The Value of New Business (VNB) margin also saw a decrease. The VNB margin fell by 18.3% to ₹1,234 crore. VNB is another key financial metric used in the insurance industry to gauge the profitability of new business written during a specific period. It represents the present value of future profits expected from the new policies sold in that period.

Price Action: HDFC Life's share price was up 0.074% at ₹605.05 in early trade on Thursday

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