Despite reporting 20.81 per cent growth in Q1 net profit, why is HDFC Life trading down?

Company reported its Q1 FY23 results on July 19

One of India’s leading private insurance companies, HDFC Life showcased a revenue growth of 21 per cent, reported at Rs 1,555.97 crore, as compared to Rs 1,285.56 crore in the same quarter of the last fiscal year. The company saw similar growth in its net profit number at 20.81 per cent, recorded at Rs 365.86 crore, as against Rs 302.26 crore in the same quarter of last fiscal year.

The net premium increased by 21 per cent to Rs 9396 crore, as against Rs 7,656 crore in the first quarter of FY22. Total Annualized Premium Equivalent (APE) also jumped by 22 per cent YOY to Rs 1,904 crore. 

The company managed to satisfy analysts’ expectations for net premium income numbers. However, the company underperformed on its APE figure, as the majority of market analysts were expecting around 32 per cent growth in APE number, as against reported growth of 22 per cent. 

On July 19, the shares of HDFC Life opened at Rs 542. The stock made an intraday high and low of Rs 544.6 and Rs 535, respectively. At 3:30 pm, the stock closed 1.36 per cent down at Rs 535.85. 

The company has a market capitalisation of Rs 1,13,234 crore and is trading at 93.8 PE. The stock has a 52-week high and low of Rs 776 and Rs 497, respectively.