HDFC Standard Life Insurance
BSE SENSEX
36,033
S&P CNX
10,607
14 July 2020
Annual Report Update | Sector: Insurance
CMP: INR598
TP: INR575 (-4%)
Neutral
Non-PAR, Protection to drive business growth
Risk retained in the Individual business reduced to 33% vs 37% last year
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Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
HDFCLIFE IN
2,014
1207.5 / 16.1
646 / 339
12/11/31
3182
36.3
Financials & Valuations (INR b)
Y/E MARCH
FY20 FY21E FY22E
Net Premiums
322.2 343.0 401.9
Surplus / Deficit
9.7
11.4 14.4
Sh. PAT
13.0
12.7 15.5
NBP gr- unwtd (%)
15.1
5.0 18.0
NBP gr - APE (%)
18.4
5.1 19.3
Premium gr (%)
12.1
6.0 17.2
VNB margin (%)
25.9
25.8 26.9
RoE (%)
20.8
17.7 19.2
RoEV (%)
12.9
19.8 14.8
Total AUMs (INRt)
1.3
1.5
1.9
VNB (INRb)
19.2
19.4 24.2
EV per share
102.4 122.7 140.9
Valuations
P/EV (x)
5.9
4.9
4.3
P/EPS (x)
93.5
95.7 78.5
Shareholding pattern (%)
As On
Mar-20 Dec-19
Promoter
63.7
66.2
DII
6.1
5.0
FII
21.1
20.0
Others
9.1
8.9
FII Includes depository receipts
Mar-19
76.1
3.4
10.6
9.9
HDFC Life’s Annual Report
reaffirms our view
that it would continue to focus on
maintaining a balanced product mix across the Savings and Protection
businesses, with an emphasis on product innovation / superior customer
service.
In the near term, there continues to be a higher focus on the Protection and
Non-PAR segments as they are relatively simpler products to transact through
the Digital channel. The Annuity business is also gaining momentum; thus, its
share has improved to ~16% of new business premium (NBP). This would enable
steady growth in value of new business (VNB) margins.
Improvement in persistency, led by a focus on better quality business, the
leveraging of technological capabilities, and need-based selling resulted in
surrenders declining to ~35% in FY20 from ~76% in FY15.
Furthermore, the Agency channel delivered 13
th
month persistency at 91% v/s
85% in Banca, reflecting the distribution strength the company has built.
The percentage of risk retained in the Individual business reduced to 33% v/s
37% in FY19, and risk retained in the Group business to 79% v/s 86% in FY19.
Investments in technology have positively impacted, with policy issuance TAT
having reduced to <4 hours from 2 days earlier; ~77% of new business policies
are auto-underwritten.
Overall, we believe HDFCLIFE would continue to deliver better business growth
than peers, led by product innovation. Overall, we estimate the VNB margin to
gradually improve to ~27% by FY22E (25.9% in FY20), while the operating RoEV
would remain steady at ~19%. HDFCLIFE currently trades at rich valuations and
thus offers limited upside, in our view. We value the stock at INR575,
corresponding to 4.1x FY22 EV. Maintain Neutral.
New business premium led by Protection, Non-PAR Savings
HDFC Life has increased focus on the Protection and Non-PAR segments; the
Non-PAR Savings business grew at ~220% YoY and the Protection business at
15% YoY. The Annuity business is gaining momentum; thus, its share has
improved to ~16% of NBP (4% of the total individual APE). The share of
Protection has improved to ~17.2% of the total APE. Furthermore, growth in
new business premiums, led by the Group Savings business, increased at 25%
YoY. We believe HDFCLIFE continues to focus on product innovation – the key
to driving business growth.
Persistency improves across cohorts; higher persistency in Agency v/s
Banca
HDFC Life reported improvement in persistency, led by a focus on better
quality business, the leveraging of technological capabilities, and need-based
selling, resulting in surrenders declining to ~35% in FY20 from ~76% in FY15.
As a result, 13
th
/61
st
month persistency improved to 90%/55% (v/s 87%/52%
last year). In terms of distribution, the Agency channel delivered 13
th
month
persistency at 91% v/s 85% in Banca. Renewal premium in the Non-PAR
segment increased 33% YoY, and that in the ULIP segment grew at 10% YoY.
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |Himanshu
Taluja
(Himanshu.Taluja@motilaloswal.com)
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com) |
Yash Agarwal
(Yash.Agarwal@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
HDFC Standard Life
Stock Performance (1-year)
Overall, renewal premium growth came in at 9% YoY, impacted by the COVID-19
crisis, as customers are preferring to conserve their cash to maintain high liquidity.
In the current environment,
we expect persistency to decline in ULIP, while remain
strong in Protection.
Surrenders, withdrawals consistently decline, while maturity payouts increased
Surrenders and withdrawals together as a percentage of total benefit payouts
declined to ~48% in FY20, from ~64% in FY18, weighed by management focus on
need-based selling. On the other hand, maturity payouts have increased primarily
owing to a higher Protection business written over the last few years.
Strong distribution network; Proprietary channels gaining momentum
HDFC Life has continued to grow its distribution reach via several new tie-ups and
partnerships, comprising over 270+ partners, 421 branches, and ~108k agent
networks. It is currently focusing on improving its Proprietary channels; the Agency
and Direct channels in particular witnessed combined growth of 32% YoY. However,
Bancassurance contributes 55% to the total individual APE.
Risk retained in Individual business declines to ~33% in FY20
The increasing proportion of the Protection business across the Individual and
Group segments has contributed to an increase in re-insurance ceded over the past
few years. Thus, re-insurance premium ceded increased at 85% YoY to INR4.8b. The
risk retained in the Individual business reduced to 33% v/s 37% in FY19, while in the
Group business, it reduced to 79% v/s 86% in FY19.
Strong focus on digital initiatives
Digitalization remains a key theme, and the company has launched various new
innovative products, such as the recent bundled life insurance product with pre-paid
mobile recharge, etc. Investments in technology have positively impacted key
operating metrics, with TAT having reduced significantly. The policy issuance TAT
has dropped to <4 hours from 2 days earlier; ~77% of new business policies are
auto-underwritten. Furthermore, nearly ~14% of the Protection business is
underwritten through tele-medicals.
Higher MTM loss leads to negative investment income in ULIP; Raising tier-II
bonds to improve solvency ratio
A plunge in the equity markets on account of COVID-19 led to MTM loss in the ULIP
segment, thus resulting in loss on INR82.2b. On the other hand, income from
investments other than in the ULIP segment increased 26% YoY to INR53.5b. Thus,
overall, net loss on the investment portfolio stands at INR28.7b. The company has
taken the board’s approval to raise tier-II bonds of INR6b, primarily to maintain a
high solvency ratio and continue growing strongly in the Protection segment as
capital consumption in the business is higher than in the Savings business.
Valuation and view
HDFCLIFE would continue to focus on maintaining a balanced product mix across the
Savings and Protection businesses, with emphasis on product innovation / superior
customer service. VNB margins have moderated over the past few quarters, and we
estimate these to gradually improve to ~27% by FY22E (25.9% in FY20). However,
persistency trends are likely to moderate, especially in the ULIP segment, while
these would remain strong in the Protection segment. On the other hand, operating
RoEV should remain steady at ~19%. HDFCLIFE currently trades at rich valuations
and thus offers limited upside, in our view. We value the stock at INR575,
corresponding to 4.1x FY22 EV. Maintain Neutral.
14 July 2020
2
 Motilal Oswal Financial Services
HDFC Standard Life
New business premium led by Protection, Non-PAR Savings
Annuity/Protection segment contributes ~16%/27% to NBP
In FY20, HDFC Life reported 12% YoY growth in total premium collections
(~INR327b), led by 15% growth in new business premium (~INR172b); renewal
premium grew at a softer rate of 9% YoY. Growth in premium was primarily
driven by a multi-channel distribution approach and diverse product portfolio of
37 retail products, 11 group products, along with six rider benefits, etc.
Furthermore, Individual first-year premium grew at 19% YoY, while Individual
single premium declined 3% YoY.
The company added nearly ~0.9m new
policies to its Individual portfolio.
Growth in total premium was also led by
strong growth in Group premium at
19% YoY to INR88.7b,
with nearly 60m new life additions to the portfolio.
In terms of APE, the total individual APE grew at 18% YoY,
primarily led by
Protection and Non-PAR Savings; conversely, ULIP declined 40% YoY,
and its
share thus fell to 28% (v/s 55% in FY19).
Product innovation is the key to driving business growth and the key
differentiator. The company has thus launched the Sanchay Plus (Non-PAR)
Savings product and Sanchay PAR advantage, for which it received a strong
response from customers.
The impact of the COVID-19 outbreak was witnessed across both new
businesses and renewal collections in the last 15 days of Mar’20, with customers
preferring to conserve their cash to maintain high liquidity.
Exhibit 2: Premium mix trends (%)
First Year Premium
Single premium
17%
2%
60%
20%
23%
3%
55%
18%
23%
6%
51%
20%
Exhibit 1: HDFC LIFE’s total premium growth led by
Group/Single individual premium
INR b
First-year Premium
Renewal Premium
Single Premium
Group Premium
Total Premium
FY16
32.9
98.2
3.6
28.3
163.0
FY18
46.2
121.3
13.2
54.9
235.6
FY20
56.3
153.7
28.3
88.7
327.0
CAGR
FY16–20
14%
12%
67%
33%
19%
Renewal Premium
Group Premium
25%
10%
48%
16%
27%
9%
47%
17%
Source: MOFSL, Company
Source: MOFSL, Company
14 July 2020
3
 Motilal Oswal Financial Services
HDFC Standard Life
Exhibit 3: Expect new business premium (unweighted)
growth at ~20% CAGR over FY20–22E
New business premium (INRb)
248.2
149.7
172.4
203.4
36
42
54
60
72
Exhibit 4: Total APE growth
Total APE (INRb)
85
104
54.9
64.9
86.2
113.5
32
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 5: New business mix (based on total APE) across
PAR, Non-PAR, & ULIP
Participating
Non-participating
ULIPs
Exhibit 6: New business mix (unweighted) across PAR, Non-
PAR, & ULIP
Participating
Non-participating
ULIPs
34.2%
47.3%
18.5%
60%
21%
20%
55%
18%
27%
49%
21%
30%
53%
23%
25%
47%
39%
14%
25%
60%
16%
56.1%
19.0%
24.9%
52.8%
20.5%
26.8%
46.7%
27.4%
25.9%
43.6%
31.5%
24.9%
38.8%
41.2%
20.0%
Source: MOFSL, Company
Source:
Exhibit 7: New business premium growth trends across segments
New business premium YoY (%) trends
PAR life- Individual & Group
PAR pension- Individual & Group
Non-PAR – Individual & Group
Non-PAR Pension – Individual & Group
Non-PAR – Life Group variable
Non-PAR – Pension Group variable
Non-PAR – Individual & Group Annuity
Non-PAR – Individual & Group Health
ULIP – Individual Life
ULIP – Individual Pension
ULIP – Group Life
ULIP – Group Pension
FY18
9.5%
41.2%
53.0%
24.1%
0.7%
9.0%
207.9%
20.3%
50.0%
61.0%
9.3%
25.1%
FY19
-34.5%
-62.4%
57.1%
1.5%
92.7%
48.1%
143.3%
84.2%
4.6%
-19.8%
-34.5%
-30.7%
FY20
32.9%
-68.3%
43.1%
11.6%
-14.3%
65.9%
3.9%
-43.4%
-38.4%
-45.6%
51.7%
2.5%
Source: MOFSL, Company
Non-PAR Savings, Protection emerge as key focus segments
The Annuity business is also
gaining momentum and
thus the share has
improved to ~16% of NBP
HDFC Life has increased focus on the Protection/Non-PAR segment; thus, the share
of Protection improved to 17.2% of total APE, and the share of Non-PAR savings to
41% of the individual APE. The Annuity business is also gaining momentum and the
share has therefore improved to ~16% of NBP (4% of the total individual APE).
14 July 2020
4
 Motilal Oswal Financial Services
HDFC Standard Life
Exhibit 8: Business mix, based on individual APE
ULIP
4%
8%
PAR
5%
Non Par savings
7%
2%
Term
Annuity
8%
4%
11.3%
7.3%
7.8%
Exhibit 9: Share of Protection, based on total APE
Protection (on total APE) (%)
16.7%
17.2%
35%
28%
5%
7%
15%
18%
55%
41%
19%
28%
53%
57%
Source: Company, MOFSL, based on individual APE
MOFSL
Source: Company,
Exhibit 10: APE split between Individual Protection, Group Protection, and Non-PAR Savings across major insurers
APE Mix
Total APE (INR b)
Individual Protection
Group Protection
Total Protection
Non-PAR Savings
FY18
85.5
0.7%
4.7%
5.4%
0.8%
SBI Life
FY19
96.9
3.8%
3.0%
6.8%
0.4%
FY20
107.5
4.7%
4.2%
8.9%
6.9%
HDFC Life
FY18
FY19
55.3
62.6
5.1%
6.7%
5.9% 10.3%
11.0% 17.0%
9.0% 15.0%
FY20
74.1
7.6%
9.6%
17.2%
41.0%
IPRU Life
FY18
FY19
77.9
78.0
5.7%
5.6%
3.7%
5.7%
9.3%
0.5%
0.9%
FY20
73.8
10.4%
4.7%
15.1%
5.2%
Max Life
FY18
FY19
32.5
39.5
4.2%
5.7%
3.7%
4.5%
7.9% 10.2%
8.0%
9.0%
FY20
41.5
8.0%
5.0%
13.0%
18.0%
Source: Company, MOFSL
14 July 2020
5
 Motilal Oswal Financial Services
HDFC Standard Life
Margin improvement led by business mix change
New business margins improve to 25.9% v/s 24.6% in FY19
The share of Protection in
the total APE improved to
17.2% in FY20 from 7.3% in
FY16
HDFC Life has a balanced product mix, with the share of PAR/Non-PAR/ULIP at
19%/41%/28% based on individual APE. The share of Protection in the total APE
improved to ~17.2% v/s 7.3% in FY16. HDFCLIFE has reflected strong growth in the
Credit Protect business at 17% YoY.
Overall, superior business growth, along with cost control, enabled HDFC Life to post
industry-leading margins, which steadily improved to 25.9% in FY20 (v/s 23.2% in
FY18). Overall, absolute VNB grew at 25% YoY to INR19.2b on premium growth and
margin expansion.
Exhibit 11: Margins have increased steadily on favorable product mix and economics of
scale
Absolute VNB (INRb)
VNB Margin (%)
23.2%
24.6%
25.9%
Credit Protect business
grew at 17% YoY
18.5%
15.2%
4.1
5.9
19.9%
22.0%
7.2
9.1
12.8
15.4
19.2
Source: MOFSL, Company
Improved persistency across cohorts; expect moderation in near term
Persistency improved
across cohorts, with
th
st
13 /61 month persistency
improving to 90%/55%, v/s
87%/52% last year
HDFC Life reported improvement in persistency across cohorts, led by its focus
on better quality business, the leveraging of technological capabilities to provide
a better experience to customers, and need-based selling, resulting in
surrenders declining to ~35% in FY20 from ~76% in FY15.
The total renewal premium growth was 9% YoY for FY20 due to the COVID-19
crisis as customers are preferring to conserve their cash at this time to maintain
their high liquidity. Furthermore, the renewal premium increased 33% YoY in
the Non-PAR segment and grew at 10% YoY in the ULIP segment. On the other
hand, renewal premium in the PAR segment reflects muted trends (-1% YoY
decline).
As a result, 13
th
/61
st
month persistency improved to 90%/55%, v/s 87%/52% last
year.
Overall, in the current environment, we expect persistency to decline in the ULIP
segment, while it would remain strong in the Protection business; expect stable
trends in the PAR segment.
14 July 2020
6
 Motilal Oswal Financial Services
HDFC Standard Life
Exhibit 12: Persistency ratios have improved across cohorts
13th Month
25th Month
37th Month
49th Month
61st Month
FY17
FY18
FY19
FY20
Source: Company, MOFSL
Key observation on analyzing segmental persistency ratios:
13
th
month persistency improved for the PAR/Non-PAR term segment by
1,500bp/100bp to 91%/88%, while ULIP persistency remains stable at 83%.
Also, 61
st
month persistency improved for PAR/Non-PAR protection by
1,700bp/400bp to 70%/67%, while it declined for the ULIP segment by 100bp to
43%.
The Agency channel delivered 13
th
month persistency of 91% due to sustained
focus on the quality of business. Persistency in the Agency channel was higher
than in the Banca channel.
Exhibit 14: Persistency trends across channels
13th Month
91%
67%
83%
68%
25th Month
85%
74%
48%
61st Month
92%
83%
Exhibit 13: Persistency trends across business segments
13th Month
91%
80%
70%
25th Month
83%
75%
61st Month
88%
81%
72%
43%
PAR
ULIP
Protection
Source: MOFSL, Company
Agency
Banca
Direct
Source: MOFSL, Company
14 July 2020
7
 Motilal Oswal Financial Services
HDFC Standard Life
Surrenders/Withdrawals consistently decline to 48% in
FY20 from 64% in FY18
ULIPs accounts for 53% of the total benefits paid v/s 79% in FY18
Surrenders and withdrawals together as a percentage of the total benefit
payout declined to 48% in FY20 from 64% in FY18 on account of the
management’s focus on need-based selling and other persistency-related
initiatives.
Benefits paid for ULIPs (as a percentage of the total benefits paid) came down to
53% in FY20 from 79% in FY18, which is also evident from the persistency ratios
reported by the company.
Overall, maturity claims have increased due to a higher number of policies
reaching policy term completion. Also, protection claims have improved on
account of a higher protection business written over the last few years
(Individual Term, Group Protection, and Health).
Exhibit 15: ULIPs account for 53% of total benefits paid v/s 79% in FY18
INR m
Surrenders & withdrawals
Discontinuance termination
Maturity & moneyback
(including Annuity)
Protection claims
(Death, Health & Rider)
Total
as a % of total
FY18
ULIP Traditional
73,280
9,960
14,340
-
13,590
2,570
103,780
79%
10,480
6,910
27,350
21%
Total
83,240
14,340
24,070
9,480
131,130
100%
FY19
ULIP Traditional
61,250
15,960
10,690
-
8,220
2,780
82,940
59%
29,350
11,630
56,940
41%
Total
77,210
10,690
37,570
14,410
ULIP
62,950
22,740
11,850
2,770
FY20
Traditional
26,840
0
45,440
17,620
89,900
47%
Total
89,790
22,740
57,290
20,390
190,210
100%
139,880 100,310
100%
53%
Source: Company, MOFSL
Exhibit 16: Proportion of surrender in total benefits paid declines steadily
Benefits paid composition
Claims by Death
Claims by Maturity
Money back payment
Annuities/pension in payment
Surrenders
Permanent and partial disability
Withdrawals
Others
Total
FY14
6%
4%
2%
0%
75%
0%
12%
2%
100%
FY15
4%
8%
1%
0%
76%
0%
9%
2%
100%
FY16
5%
9%
1%
1%
60%
12%
10%
2%
100%
FY17
6%
12%
1%
1%
54%
13%
11%
3%
100%
FY18
8%
13%
1%
1%
53%
11%
10%
3%
100%
FY19
11%
19%
0%
1%
44%
8%
12%
0%
100%
FY20
12%
24%
0%
2%
35%
12%
13%
1%
100%
Source: Company, MOFSL
14 July 2020
8
 Motilal Oswal Financial Services
HDFC Standard Life
Strong distribution network; Proprietary channels
gaining momentum
Nearly 35k new agents
were added during the year
To maintain balanced distribution, HDFC Life has continued to widen its
distribution reach via several new tie-ups and partnerships. These comprise over
270+ partners, ranging from traditional banks, NBFCs, to new-age fintech and
insurtech firms. Moreover, HDFCLIFE had 421 branches and ~108k agent
networks (35k new agents were added during the year) as of FY20.
The management is currently focusing on improving its proprietary channels;
the Agency and Direct channels witnessed combined growth of 32% YoY.
The Proprietary (the Agency and Direct channels) and Broker channels grew at
~32% and ~164%, respectively, based on individual APE.
HDFC Life has a well-diversified distribution mix, with the Bancassurance /
Agency / Direct / Broker/ Group business contributing 23%/7%/17%/3%/51% to
the total new business premium. However, based on individual APE,
Bancassurance contributes 55% to the total individual APE.
Exhibit 17: Distribution trends based on individual APE; increasing share of Proprietary
channels
Banca
9%
11%
4%
11%
12%
5%
Brokers
14%
11%
5%
Agency
Direct
19%
13%
4%
22%
14%
9%
55%
75%
72%
71%
64%
FY16
FY17
FY18
FY19
FY20
Source: MOFSL, Company
Exhibit 18: Proportion of Proprietary channels (Direct & Agents) improves to 24%
Distribution mix, based on total NBP (%)
Bancassurance
Individual Agents
Direct
Broker
Group
FY16
40%
8%
7%
2%
43%
FY17
32%
7%
7%
2%
52%
FY18
33%
7%
10%
2%
48%
FY19
26%
7%
16%
2%
49%
FY20
23%
7%
17%
3%
51%
Source: Company, MOFSL
14 July 2020
9
 Motilal Oswal Financial Services
HDFC Standard Life
Total operating expense ratio broadly stable
Commission rates increase led by product mix change
Total commission expenses
increased 32% YoY,
primarily led by a product
mix change; thus, the total
commission ratio increased
to 4.5%
Total operating expenses rose 12% YoY to INR42.7b, in line with growth in the
business. They were primarily driven by an increase in costs related to volumes,
employees, marketing, and IT. The total operating expenses to premium ratio
stood stable at 13.1%.
However, commission expenses increased at 32% YoY, largely led by a product
mix change; thus, the total commission ratio increased to 4.5% v/s 3.8% in FY19.
The commission rate on first-year regular premiums increased by 240bp to
17.9%, while commission rates on single premium increased by only 10bp to
1.3% v/s 1.2% in FY19.
HDFCLIFE’s focus remains on expanding distribution and investment in
technology, resulting in a total expense (opex + commission) to premium ratio
of 17.5% in FY20 v/s 16.9% in FY19.
Exhibit 19: Commission expenses increase in first-year premium, led by product mix change
Commission (INR b)
Premium
Commission
Commission (%)
FY18
First
year
47.4
8.7
18.4%
Single Renewal Total
66.1
0.5
0.8%
122.2
1.6
1.3%
235.6
10.8
4.6%
First
year
50.6
7.8
15.5%
FY19
Single Renewal
99.1
1.2
1.2%
142.2
2.1
1.5%
Total
291.9
11.2
3.8%
FY20
First year Single Renewal
60.4
10.8
17.9%
111.9
1.4
1.3%
154.7
2.4
1.6%
Total
327.1
14.6
4.5%
Source: Company, MOFSL
Exhibit 20: Total commission grows at 21% CAGR, opex at
23% over FY16–FY20
Commission (INRb)
Opex (INRb)
Exhibit 21: Expect cost ratios to improve
Total Expenses (Opex+ Comm)/total Premium (%)
12.8
5.1
14.9
6.2
18.7
7.0
23.9
7.9
31.6
10.7
38.1
42.7
11.2
14.9
Source: Company, MOFSL
Source: Company, MOFSL
14 July 2020
10
 Motilal Oswal Financial Services
HDFC Standard Life
Exhibit 22: Commission paid to HDFC Bank
Commission paid to HDFC bank (INRb)
73%
67%
74%
77%
74%
% of total commission
74%
67%
60%
4.7
3.4
4.5
5.3
5.7
7.6
6.9
8.4
Source: MOFSL, Company
Strong focus on digital initiatives
The policy issuance TAT has
reduce to <4 hours from 2
days earlier
~77% of new business
policies are auto-
underwritten
With the use of technology, the company has created a platform and ecosystem,
and built certain innovative products such as: a) Sanchay Plus (a savings plan
with guaranteed returns and the option for lifelong income), b) Sanchay Par
Advantage (a participating plan with lifelong regular income, payout flexibility,
and total life cover), and c) the recent bundled life insurance product with pre-
paid mobile recharge. Thus, digitalization remains a key theme for the company.
It has created platforms such as the ‘Life99’ retirement platform, a one-stop
shop to plan retirement, with key features such as the ability to track EPF,
gratuity, NPS, and other investments (such as mutual funds in a consolidated
manner); leveraged analytics in underwriting processes, such as to provide pre-
approved sum assured (PASA) to customers; deployed bots for process
automation; and launched service apps.
The company’s key initiatives include the use of artificial intelligence, cloud
computing, machine learning algorithms, and bots to ensure a 24x7 service
experience for customers.
Investments in technology have positively impacted key operating metrics, with
the TAT having reduced significantly. The policy issuance TAT has reduce to <4
hours from 2 days earlier, and ~77% of new business policies are auto-
underwritten.
Nearly ~14% of the Protection business is underwritten through tele-medicals.
This has reduced the turnaround time significantly and enhanced the company’s
ability to provide protection policies during the lockdown period.
14 July 2020
11
 Motilal Oswal Financial Services
HDFC Standard Life
Exhibit 23: Build technological ecosystem and platform to simplify life insurance for customers
Source: MOFSL, Company
Exhibit 24: Insta PRL – Mobile app for on-boarding prospective agents
Source: MOFSL, Company
Exhibit 25: Customer complaints declining sharply
Customer Complaints per 10k Policies
107
81
70
61
Exhibit 26: Average time taken for claims settlements
reduces significantly
Average time taken for claim settlement (No. in days)
10
8
47
5
5
4
4
Source: MOFSL, Company
Source: MOFSL, Company
14 July 2020
12
 Motilal Oswal Financial Services
HDFC Standard Life
Risk retained in Individual business declines to 33% in FY20
Re-insurance ceded grows at 48% CAGR over FY15–20
In the normal course of the business, the company seeks to reduce risk
exposure by re-insuring certain levels of risk with re-insurers. The increasing
proportion of the Protection business across the Individual and Group segments
over the last few years has contributed to an increase in the re-insurance ceded
over the past few years. The re-insurance premium ceded increased at 85% YoY
to INR4.8b. However, the re-insurance ceded increased at a 48% CAGR over
FY15–20.
Furthermore, the percentage of risk retained reduced to 33% in the Individual
business v/s 38% in FY17 and to 79% in the Group business v/s 87% in FY17.
Exhibit 27: Re-insurance ceded increases at 48% CAGR over FY15–20
Reinsurance premium ceded (INRb)
4.8
2.6
0.7
1.3
1.7
1.9
Source: MOFSL, Company
Exhibit 28: Percentage of risk retained (on sum assured) in Individual business reduces to 33% in FY20 from 37% in FY19; risk
retained in Group business reduces to 79% in FY20 from 86% in FY19
Individual business
Risk retained
Risk reinsured
Group business
Risk retained
Risk reinsured
Total business
Risk retained
Risk reinsured
FY17
INR b
1,695
2,722
2,787
417
4,481
3,139
%
38%
62%
87%
13%
59%
41%
FY18
INR b
2,167
3,491
4,210
594
6,377
4,085
%
38%
62%
88%
12%
61%
39%
FY19
INR b
2,634
4,557
6,044
982
8,679
5,539
%
37%
63%
86%
14%
61%
39%
FY20
INR b
2,952
5,883
7,359
1,940
10,311
7,823
%
33%
67%
79%
21%
57%
43%
Source: MOFSL, Company
14 July 2020
13
 Motilal Oswal Financial Services
HDFC Standard Life
Higher MTM loss in ULIP leads to negative investment income
A plunge in the equity markets on account of COVID-19 led to MTM loss in the
ULIP segment, resulting in loss of INR82.2b. On the other hand, income from
investments other than in the ULIP segment increased by 26% YoY to INR53.5b.
Thus, overall, net loss on the investment portfolio stood at INR28.7b.
Exhibit 29: Investment income grows moderately at 6% YoY on higher MTM gains
INR m
Policyholder's
Unit
Non-PAR
PAR
Shareholder’s
Total
YoY growth
FY15
122,500
102,050
4,590
15,860
2,010
124,510
140%
FY16
FY17
17,900 111,410
2,540 85,570
6,040
8,300
9,320 17,540
1,690
2,270
19,590 113,680
-84%
480%
FY18
85,950
53,260
11,820
20,870
2,800
88,750
-22%
FY19
FY20
90,275 (33,110)
52,070 (82,210)
17,580 28,310
20,620 20,790
4,080
4,378
94,354 (28,732)
6%
NM
Source: Company, MOFSL
In FY20, AUM growth remained muted at 1% to ~INR1.3t. The company
reported a debt:equity mix of 71%:29% in this year, v/s 59%:41% in FY17. ~96%
of debt is toward government bonds or AAA-rated securities. Overall, HDFCLIFE
continues to rank among the top three private life insurance players in terms of
AUM.
Exhibit 31: Equity proportion declines to 29%
Debt (%)
1,256
1,272
46%
48%
40%
41%
39%
38%
29%
Equity (%)
Exhibit 30: Total AUM grows at 17% CAGR over FY14–20
Total AUM(INRb)
1,066
503
670
742
917
54%
52%
60%
59%
61%
62%
71%
Source: Company, MOFSL
Source: Company, MOFSL
14 July 2020
14
 Motilal Oswal Financial Services
HDFC Standard Life
Other important highlights
Solvency ratio declines, affected by negative economic variance
A nosedive in the equity markets led to a negative investment variance. As a
result, HDFCLIFE too reported a negative investment variance of INR10b in FY20.
This resulted in an impact on solvency ratios, which declined to 184% v/s 195%
in 9MFY20.
Thus, to maintain a higher solvency ratio, HDFCLIFE seeks to raise capital of up
to INR6b via the subordinated debt route.
Exhibit 32: Solvency ratio across peers
FY19
9MFY20
FY20
IPRU life
SBI life
HDFC life
Max life
Source: MOFSL, Company
New business strain increases, but pace subsides
Growth in the new business strain moderated for HDFCLIFE, led by slowdown in
business growth, while backbook surplus supported 21% YoY growth in
underwriting profits. However, decline in shareholder surplus on lower
investment returns dragged down reported earnings; thus, PAT edged up by a
mere 1% YoY.
YoY
growth (%)
21%
NM
17%
-45%
1%
Exhibit 1:
HDFCLIFE: Underwriting profit trends
INR b
Underwriting profits
- New business strain
- Backbook surplus
Shareholders surplus
PAT
FY16
6.8
(7.7)
14.5
1.3
8.2
FY17
7.5
(7.1)
14.6
1.4
8.9
FY18
8.5
(10.6)
19.1
2.6
11.1
FY19
9.0
(16.5)
25.5
3.8
12.8
FY20
10.9
(19.1)
29.9
2.1
13.0
Source: MOFSL, Company
Operating RoEV declines for HDFCLIFE
With consistent improvement witnessed in margins over the last few years and
strong cost control, the operating RoEV for HDFCLIFE has improved. This has
been supported by positive operating variances, largely as cost overruns have
declined and persistency and other operating parameters have improved.
However, in FY20, the negative impact on operating assumptions was seen on
account of strengthening persistency assumptions and the creation of a COVID-
19 reserve in anticipation of worsening mortality experiences. Thus, operating
RoEV declined to 18.1% v/s 20.1% in FY19.
We have seen similar trends across insurers, expect SBILIFE.
14 July 2020
15
 Motilal Oswal Financial Services
HDFC Standard Life
Exhibit 33: Operating RoEV trends
FY19
20.2%
15.2%
20.5%
17.3%
FY20
20.1%
21.9%
18.1%
20.3%
IPRU life
SBI life
HDFC life
Max life
Source: MOFSL, Company
Exhibit 34: EV movement analysis
INR b
Opening EV (FY19)
Unwind
Unwind rate (%)
VNB
Operating experience variances
Change in Operating assumptions
EVOP
Economic assumption change & Invt variance
Others (ESOP/Dividend Payouts)
Closing EV (FY20)
Operating RoEV
HDFC LIFE
183.0
13.7
7.5%
19.2
1.5
(1.2)
33.1
(10.0)
0.4
206.5
18.1%
Source: MOFSL, Company
14 July 2020
16
 Motilal Oswal Financial Services
HDFC Standard Life
Subsidiaries’ performances
HDFC Pension Management Company Limited:
The company commenced
operations in Aug’13 and is a wholly-owned subsidiary of HDFC Life. As of FY20,
HDFC Pension’s AUM stood at INR82.7b, registering a CAGR of over ~80% over
FY18–20. It had a total customer base of 0.55m as of FY20. HDFC Pension is the
fastest growing Pension Fund Manager under the National Pension System
(NPS) architecture, and the largest privately-owned pension fund management
company with market share of 31%.
Exhibit 35: Pension fund AUM grows at ~80% CAGR over FY18–20
Pension AUM (INRb)
82.7
51.7
25.6
0.5
3.8
11.6
Source: Company, MOFSL
HDFC International Life and Re Company Limited (HILRCL):
This is a wholly-
owned subsidiary at the Dubai International Financial Centre (DIFC). It was
established with the primary objective of offering life re-insurance capacity in
the UAE and other GCC nations. In FY20, it earned gross income of USD7.3m
(72% YoY) and PAT of USD0.4m.
14 July 2020
17
 Motilal Oswal Financial Services
HDFC Standard Life
Valuations and view
Private sector life insurance companies have 44% market share in the total new
business APE, and HDFCLIFE is the market leader among the private insurers.
We believe it would continue with its product innovation and superior customer
service to maintain market leadership. However, the near term business outlook
remains challenging for the sector and thus estimate APE growth at 12% CAGR
over FY20–22 for HDFCLIFE.
Protection and Annuity are likely to do well as they are relatively simpler
products and easy to transact through the Digital channel. Thus, we expect the
share of Protection/Non-PAR to increase, driving further margin expansion.
Overall, we expect VNB margins to improve to ~27% by FY22E.
HDFCLIFE has delivered strong return ratios, with average RoE/RoEV at
25%+/21.1% over FY16–19. We expect return ratios to remain strong, driven by
healthy new business margins, a balanced product mix, quality underwriting,
and robust persistency ratios.
Maintain Neutral, with revised TP of INR575:
HDFCLIFE would continue to
focus on maintaining a balanced product mix across the Savings and Protection
businesses, with emphasis on product innovation / superior customer service.
VNB margins have moderated over the past few quarters, and we estimate
these to gradually improve to ~27% by FY22E (25.9% in FY20). However,
persistency trends are likely to moderate, especially in the ULIP segment, while
these would remain strong in the Protection segment. On the other hand,
operating RoEV should remain steady at ~19%. HDFCLIFE currently trades at rich
valuations and thus offers limited upside, in our view. We value the stock at
INR575, corresponding to 4.1x FY22 EV. Maintain Neutral.
14 July 2020
18
 Motilal Oswal Financial Services
HDFC Standard Life
Financials and valuations
Technical account (INR b)
Gross Premiums
Reinsurance Ceded
Net Premiums
Income from Investments
Other Income
Total income (A)
Commission
Operating expenses
Total commission and opex
Benefits Paid (Net)
Change in reserves
Prov for doubtful debts
Total expenses (B)
(A) - (B)
Tax (incl GST)
Surplus / Deficit
Shareholder's a/c (INR b)
Transfer from technical a/c
Income From Investments
Total Income
Other expenses
Contribution to technical a/c
Total Expenses
PBT
Tax
PAT
Growth
Premium (INR b) & growth (%)
NBP - unweighted
NBP - wrp
Renewal premium
Total premium - unweighted
NBP growth - unweighted
NBP growth - wrp
Renewal premium growth
Tot. premium growth - unweighted
Premium mix (%)
New business - un weighted
- Individual mix
- Group mix
New business mix - WRP
- Participating
- Non-participating
- ULIPs
Total premium mix - un weighted
- Participating
- Non-participating
- ULIPs
Indi premium sourcing mix (%)
Individual agents
Corporate agents-Banks
Direct business
Others
FY17
194.5
(1.7)
192.7
111.4
1.4
305.5
7.9
23.9
31.8
100.0
160.5
0.3
292.7
12.9
3.4
9.5
FY17
7.9
2.3
10.1
0.7
0.4
1.0
9.1
(0.2)
8.9
9%
FY17
86.2
41.5
108.2
194.5
32.9%
14.9%
10.2%
19.2%
FY17
48.7%
51.3%
30.0%
21.5%
48.5%
25.9%
27.4%
46.7%
FY17
15.5%
61.1%
14.9%
8.6%
FY18
235.6
(1.9)
233.7
85.9
2.7
322.4
10.7
31.6
42.3
131.1
133.2
0.0
306.7
15.7
4.7
10.9
FY18
10.0
2.8
13.0
0.1
1.6
1.7
11.3
(0.2)
11.1
24%
FY18
113.5
54.0
122.1
235.6
31.7%
30.0%
12.8%
21.2%
FY18
52.4%
47.6%
24.8%
22.7%
52.5%
24.9%
31.5%
43.6%
FY18
13.2%
58.8%
19.4%
8.6%
FY19
291.9
(2.6)
289.2
90.3
4.8
384.4
11.2
38.1
49.3
139.9
175.1
0.9
365.2
19.2
5.7
13.5
FY19
12.1
4.1
16.4
0.3
3.1
3.5
12.9
(0.1)
12.8
15%
FY19
149.7
60.5
142.1
291.9
31.9%
12.0%
16.4%
23.9%
FY19
51.1%
48.9%
14.4%
38.5%
47.1%
20.0%
41.2%
38.8%
FY19
13.8%
46.7%
31.8%
7.8%
FY20
327.1
(4.8)
322.2
(33.1)
3.5
292.6
14.9
42.7
57.6
190.2
24.4
5.7
277.9
14.7
5.0
9.7
FY20
11.9
4.4
16.5
0.3
1.0
3.4
13.1
(0.2)
13.0
1%
FY20
172.4
71.6
154.7
327.1
15.1%
18.4%
8.8%
12.1%
FY20
48.8%
51.2%
15.9%
59.5%
24.5%
18.5%
47.3%
34.2%
FY20
13.3%
41.8%
35.0%
9.9%
FY21E
346.7
(3.6)
343.0
150.5
3.8
497.3
15.7
42.4
58.1
170.8
241.7
6.6
477.2
20.1
8.7
11.4
FY21E
12.0
4.6
16.7
0.4
0.9
3.3
13.4
(0.7)
12.7
-2%
FY21E
181.0
75.3
165.6
346.7
5.0%
5.1%
7.1%
6.0%
FY21E
60.0%
40.0%
27.4%
39.5%
33.2%
40.0%
12.8%
47.2%
FY21E
22.4%
52.6%
17.5%
7.5%
FY22E
406.1
(4.3)
401.9
173.6
4.1
579.5
18.4
48.4
66.7
208.2
273.4
8.3
556.6
22.9
8.5
14.4
FY22E
15.4
4.3
19.9
0.4
1.1
3.5
16.4
(0.9)
15.5
22%
FY22E
213.6
89.8
192.5
406.1
18.0%
19.3%
16.2%
17.2%
FY22E
62.0%
38.0%
27.1%
39.1%
33.9%
40.0%
12.8%
47.2%
FY22E
22.4%
52.6%
17.5%
7.5%
14 July 2020
19
 Motilal Oswal Financial Services
HDFC Standard Life
Financials and valuations
Balance sheet (INR b)
Sources of Fund
Share Capital
Reserves And Surplus
Shareholders' Fund
Policy Liabilities
Prov. for Linked Liab.
Funds For Future App.
Current liabilities & prov.
Total
Application of Funds
Shareholders’ invt
Policyholders’ invt
Assets to cover linked liab.
Loans
Current assets
Total
Operating ratios (%)
Investment yield
Commissions / GWP
- first year premiums
- renewal premiums
- single premiums
Operating expenses / GWP
Total expense ratio
Claims / NWP
Solvency ratio
Persistency ratios (%)
13th Month
25th Month
37th Month
49th Month
61st Month
Profitability ratios (%)
VNB margin (%)
RoE (%)
RoIC (%)
Operating ROEV
RoEV (%)
Valuation & key data
Total AUMs (INRb)
- of which equity AUMs (%)
Dividend %
Dividend payout ratio (%)
EPS, INR
Value of new business (INRb)
Embedded Value (INRb)
EV per share (INR)
VIF as % of EV
P/VIF (%)
P/AUM (%)
P/EV (x)
P/EPS (x)
FY17
20.0
18.1
38.4
327.8
538.0
8.7
38.2
951.1
32.5
346.9
538.0
0.5
29.7
951.1
FY17
12.6%
4.1%
17.7%
1.3%
0.1%
12.3%
16.3%
51.1%
192%
FY17
81.0%
73.0%
64.0%
58.0%
57.0%
FY17
22.0%
25.5%
41.0%
21.9%
22.0%
FY17
917
41%
11%
30%
4.5
9.1
124.5
61.8
67%
14.5
132%
9.7
134.3
FY18
20.1
27.1
47.5
423.2
546.0
35.5
46.5
1,104.8
40.7
453.5
571.9
0.2
35.2
1,104.8
FY18
8.4%
4.6%
18.4%
1.3%
0.8%
13.4%
18.0%
55.2%
192%
FY18
87.1%
77.4%
70.9%
62.2%
51.0%
FY18
23.2%
25.8%
50.1%
21.6%
22.0%
FY18
1,066
39%
14%
30%
5.5
12.8
151.9
75.4
68%
11.7
113%
8.0
108.6
FY19
20.2
36.4
56.6
536.7
605.2
39.5
51.2
1,300.3
50.5
571.2
633.8
1.1
40.4
1,300.3
FY19
7.5%
3.8%
15.5%
1.5%
1.2%
13.1%
16.9%
46.4%
188%
FY19
87.2%
80.5%
72.0%
67.7%
52.3%
FY19
24.6%
24.5%
56.8%
20.1%
20.3%
FY19
1,256
38%
16%
31%
6.3
15.4
182.7
90.7
68%
9.7
96%
6.6
94.7
FY20
20.2
49.7
68.0
652.7
508.4
42.2
49.8
1,321.6
58.6
671.9
541.8
3.0
43.1
1,321.6
FY20
-2.7%
4.6%
17.9%
1.6%
1.3%
13.0%
17.5%
56.4%
184%
FY20
90.1%
80.2%
73.8%
67.2%
55.0%
FY20
25.9%
20.8%
56.8%
18.2%
12.9%
FY20
1,272
29%
0%
0%
6.4
19.2
206.3
102.4
65%
9.0
95%
5.9
93.5
FY21E
20.2
57.3
75.6
19.4
768.1
49.9
64.7
977.7
67.3
712.5
768.1
3.7
53.8
977.7
FY21E
10.2%
4.5%
17.1%
1.9%
1.1%
12.2%
16.6%
46.8%
168%
FY21E
91.6%
82.2%
73.9%
68.6%
55.0%
FY21E
25.8%
17.7%
55.3%
18.6%
19.8%
FY21E
1,548
40%
21%
40%
6.3
19.4
247.1
122.7
68%
7.2
78%
4.9
95.7
FY22E
20.2
67.6
85.9
139.1
921.8
59.1
84.1
1,290.0
80.8
858.6
921.8
4.6
67.3
1,290.0
FY22E
9.7%
4.5%
16.6%
2.0%
1.0%
11.9%
16.3%
48.7%
157%
FY22E
92.4%
83.4%
75.4%
69.0%
56.1%
FY22E
26.9%
19.2%
134.8%
18.7%
14.8%
FY22E
1,861
40%
21%
33%
7.6
24.2
283.8
140.9
68%
6.2
65%
4.3
78.5
14 July 2020
20
 Motilal Oswal Financial Services
HDFC Standard Life
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity
& Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the
website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should
be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"
and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and
investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for
distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document
relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order
to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives have financial interest in the subject company, as they have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
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 Motilal Oswal Financial Services
HDFC Standard Life
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.
The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,
in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report
constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities
discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives,
financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document
should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including
the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be
suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial
risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions
contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as
endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and
alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect
or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment
banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and
independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category
of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors,
employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may
arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any
and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold
MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any
errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management
Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of
Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a
group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory
services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee
of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj
Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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