HDFCLIFE - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | HDFCLIFE | Market Cap | 1,54,279 Cr. | Current Price | 715 ₹ | High / Low | 821 ₹ |
| Stock P/E | 81.6 | Book Value | 81.4 ₹ | Dividend Yield | 0.29 % | ROCE | 6.53 % |
| ROE | 10.8 % | Face Value | 10.0 ₹ | DMA 50 | 747 ₹ | DMA 200 | 742 ₹ |
| Chg in FII Hold | -0.55 % | Chg in DII Hold | 0.64 % | PAT Qtr | 421 Cr. | PAT Prev Qtr | 447 Cr. |
| RSI | 36.8 | MACD | -9.74 | Volume | 10,18,784 | Avg Vol 1Wk | 25,06,402 |
| Low price | 600 ₹ | High price | 821 ₹ | PEG Ratio | 7.35 | Debt to equity | 0.18 |
| 52w Index | 52.2 % | Qtr Profit Var | 1.40 % | EPS | 8.77 ₹ | Industry PE | 80.8 |
💹 Core Financials: HDFCLIFE shows moderate profitability with ROE at 10.8% and ROCE at 6.53%, which are relatively low compared to peers. Debt-to-equity ratio of 0.18 indicates a conservative capital structure. Quarterly PAT declined slightly from ₹447 Cr. to ₹421 Cr., reflecting a modest profit variation of 1.40%. Dividend yield of 0.29% is minimal, offering limited income for shareholders. EPS at ₹8.77 highlights modest earnings power.
📊 Valuation Indicators: Current P/E of 81.6 is almost equal to the industry average of 80.8, suggesting the stock is priced at a premium. Book value of ₹81.4 against CMP of ₹715 implies a high P/B ratio (~8.8). PEG ratio of 7.35 indicates expensive valuation relative to growth prospects. Intrinsic value appears lower than CMP, pointing to stretched valuations.
🏢 Business Model & Competitive Advantage: HDFCLIFE operates in the life insurance sector, benefiting from strong brand equity under the HDFC Group. Its competitive advantage lies in diversified insurance products, strong distribution channels, and trust associated with the brand. Recurring premium inflows provide stability, though profitability margins remain under pressure.
💰 Entry Zone Recommendation: Considering DMA 50 at ₹747 and DMA 200 at ₹742, the stock is trading below these averages, showing weakness. A favorable entry zone would be ₹640–₹680 during corrections. Current levels remain slightly overvalued relative to intrinsic metrics.
📈 Long-Term Holding Guidance: HDFCLIFE remains a strong brand in the insurance sector, but valuations are stretched and profitability ratios are modest. Long-term investors can hold for brand strength and industry growth, while new investors should wait for dips to improve risk-reward balance.
Positive
- Strong brand equity under HDFC Group.
- Diversified insurance product portfolio.
- Debt-to-equity ratio of 0.18 ensures financial stability.
- Stable recurring premium inflows provide resilience.
Limitation
- ROE (10.8%) and ROCE (6.53%) are relatively low.
- P/E ratio (81.6) is very high compared to intrinsic value.
- Dividend yield of 0.29% offers limited income.
- Quarterly PAT declined slightly, showing weak growth momentum.
Company Negative News
- Decline in FII holdings (-0.55%) signals reduced foreign investor confidence.
- Stock trading below DMA 50 and DMA 200 indicates technical weakness.
Company Positive News
- Increase in DII holdings (+0.64%) reflects strong domestic institutional support.
- Strong brand trust and distribution reach under HDFC Group.
- Stable inflows from insurance premiums.
Industry
- Life insurance industry benefits from rising financial awareness and penetration in India.
- Industry P/E at 80.8 suggests sector trades at premium valuations.
- Competition from SBI Life, ICICI Prudential Life, and Max Life keeps pressure on margins.
Conclusion
⚖️ HDFCLIFE is a fundamentally stable company with strong brand equity and recurring revenues, but profitability ratios are modest and valuations are stretched. Long-term investors can hold for industry growth, while new investors should wait for corrections towards ₹640–₹680 for better entry opportunities.
Would you like me to also prepare a comparative HTML snippet against SBI Life and ICICI Prudential Life to highlight relative strengths and weaknesses?