With a market capitalization of Rs 115,000 crores, shares of HDFC Life Insurance (NS: HDFL ) Company Limited zoomed more than 4 percent today and currently trade at Rs 535. The scrip witnessed an intra-day high of around 8 percent as compared to the previous closing price of Rs 513.30.
One of the probable reasons for the stock prices to show such movements is pertaining to the permissions given by the Reserve Bank of India (RBI) to HDFC or HDFC Bank (NS: HDBK ) to invest and increase its stake in the life insurance company.
“We wish to inform you that HDFC Ltd has informed the stock exchanges on April 21, 2023, that HDFC Bank has received a letter dated April 20, 2023, from the Reserve Bank of India (RBI) on certain forbearances sought by it, in relation to the ongoing Scheme. HDFC Bank,
basis the same, has made a disclosure to the stock exchanges. We further wish to draw your attention to ‘Point No 2’ as mentioned in the said announcement made by HDFC Bank, which inter alia states that the RBI has permitted HDFC Bank or HDFC Ltd to increase the shareholding to more than 50 percent in HDFC Life Insurance Company Ltd, prior to the effective date” HDFC Life stated in a recent regulatory filing with the exchange.
Founded in 2000, HDFC Life Insurance Company Limited is a life insurance company offering group and individual insurance solutions such as Pension, Protection, Savings and Investment, along with Children’s and Women’s Plans. The company operates through segments such as participating, non-participating, and various other Unit-Linked policies.
Digging into the financials, the company has been able to successfully increase its revenues from Rs 13,138 crores in Q2 to Rs 14,402 crores in Q3. On a contrasting note, the net profits, during the same period, reduced from Rs 329 crores to Rs 316 crores.
The negative effects of PAT figures have certainly affected the profitability metrics as well with return on equity (ROE) moving down from 17.65 percent during FY20-21 to 11.08 percent in FY21-22. Moreover, the return on capital employed (ROCE), during the same timeframe, went down from 16.9 percent to 10.36 percent.
The net profit margins of the company have been observed to consistently reduce over the past 5 financial years with a recent movement from 3.56 percent in FY20-21 to 2.84 percent in FY21-22.
As per the latest shareholding pattern data available, promoters hold a 50.31 percent stake in the company. FIIs, breaking its streak of continuous increase in stake from the March-December quarter, hold a 29.84 percent stake in the company.
Written by Amit Madnani
The post HDFC Life Insurance stock jumps up to 8% today – Check the reason for the uptrend appeared first on Trade Brains.
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