NAME: MANOJ GUPTA.

TOPIC NAME: HDFC EQUITY ANALYSIS.

INTRODUCTION
A report on a Equity analysis of a HDFC Life insurance limited.
INTRODUCTION TO HDFC LIFE INSURANCE COMPANY LTD.
HDFC Life Insurance Ltd is a long-term life insurance provider with its headquarters
in Mumbai, offering individual and group insurance services and incorporated on 14 August
2000.
The company is a joint venture between Housing Development Finance Corporation
Ltd(HDFC), one of India's leading housing finance institutions and Standard Life Aberdeen,
a global investment company. As on 31 March 2020, the promoters; HDFC Ltd. and Standard
Life (Mauritius Holdings) 2006 Ltd. hold a 51.69% and 34.75% stake in HDFC Life
respectively. The remaining equity is held by public shareholders.
It obtained the certificate of commencement of business on 12 October 2000 and certificate
of registration from Insurance Regulatory and Development Authority of India (IRDAI) to
undertake the life insurance business on 23rd October 2000.HDFC Life has 421 branches and
is present in 980+ cities, villages and towns in India and supported by 16,544 employees. The
company has also established a liaison office in Dubai.
HDFC Life distributes its products through a multi-channel network consisting of Insurance
agents, Bancassurance partners (HDFC Bank, Saraswat Bank, RBL Bank), a Direct channel,
Insurance Brokers, MFIs (Micro Finance Institutions), SFBs (Small Finance Banks), etc. and
39 partnerships within non-traditional ecosystems and an Online Insurance Platform and
currently one of the leading financial service providers in India offering finance in varied
sectors like housing, banking, life insurance and general insurance, asset
management and education loans and many other products.
SOME KEY HIGHLIGHT OF COMPANY ACHIEVEMENT

The HDFC was established in 1977, for the purpose of providing the home loan for long term

HDFC is rated as (AAA) by the CRISIL and ICRA.

In the year 2004, it was awarded DREAM HOME AWARD.

It has got 3rdrank in the investment management, in year 2006.

One of the largest financial institution of India with more than 2 million

PRODUCT AND SERVICE

HDFC Life's products include Protection, Pension, Savings, Investment, Health along with
Children and Women plans. The company also provides an option of customizing the plans,
by adding optional benefits called riders, at an additional price. The Company has categorised
its product portfolio covering five principal segments across the individual and group
categories namely participating, non-participating protection term, non-participating
protection health, other non-participating and unit-linked insurance products. The company
currently has 37 retail and 11 group products, along with 6 optional rider benefits (as on 24
March 2020).

• Protection Plans – insurance plans that provide protection and financial stability
to the family in case of any unforeseen events.
• Click2Protect life is their online term plan.
• Launched CSC Suraksha to be sold exclusive through the Common Services
Centre network.
• Click2Invest is their online ULIP investment plan.
• Health Plan – offers financial security to meet health related contingencies.
• Savings & Investment plans – These plans help in investment to achieve financial
goals.
• Retirement plans – financial security for life post retirement.
• Women's plans – plans catering to different financial needs of women.
• Children's plans – plans meant to secure children's future.
• Rural & social Plans – meant specifically for rural customers.
• Click2Retire completed their Click2 portfolio.
• ULIP Investment with more funds.

INSURANCE SECTOR IN INDIA

• Insurance industry in India has seen a major growth in the last decade along with an
introduction of a huge number of advanced products. This has led to a tough competition
with a positive and healthy outcome.
• Insurance sector in India plays a dynamic role in the wellbeing of its economy. It
substantially increases the opportunities for savings amongst the individuals, safeguards
their future and helps the insurance sector form a massive pool of funds.
• With the help of these funds, the insurance sector highly contributes to the capital
markets, thereby increasing large infrastructure developments in India.
• The Indian Insurance Sector is basically divided into two categories – Life Insurance
and Non-life Insurance. The Non-life Insurance sector is also termed as General
Insurance. Both the Life Insurance and the Non-life Insurance is governed by
the IRDAI (Insurance Regulatory and Development Authority of India).
• The role of IRDA is to thoroughly monitor the entire insurance sector in India and
also act like a custodian of all the insurance consumer rights. This is the reason all the
insurers have to abide by the rules and regulations of the IRDAI.
• The Insurance sector in India consists of total 57 insurance companies. Out of which
24 companies are the life insurance providers and the remaining 33 are non-life
insurers. Out which there are seven public sector companies.
• Life insurance companies offer coverage to the life of the individuals, whereas the
non-life insurance companies offer coverage with our day-to-day living like
travel, health insurance, our car and bikes, and home insurance. Not only this, but
the non-life insurance companies provide coverage for our industrial equipment’s as
well. Crop insurance for our farmers, gadget insurance for mobiles, pet insurance
etc. are some more insurance products being made available by the general
insurance companies in India.
 FINANCIAL ANALYSIS

INCOME STATEMENT OF HDFC LAST FIVE YEARS

Annual Mar 2020 Mar 2019 Mar 2018 Mar 2017 Mar 2016

Sales 1,666 1,645 1,296 1,016 889

Other 19 21 13 0 10
Income
Total 1,686 1,666 1,309 1,016 900
Income
Total 372 375 184 107 66
Expenditure
EBIT 1,313 1,291 1,124 908 833

Interest 0 0 0 0 0

Tax 16 13 17 22 16

Net Profit 1,297 1,277 1,107 886 816

BALANCE SHEET OF HDFC LAST FIVE YEARS

Equities & Mar 2020 Mar 2019 Mar 2018 Mar 2017 Mar 2016
Liabilities
Share 2,018 2,017 2,011 1,998 1,995
Capital
Reserves 4,782 3,624 2,722 1,827 1,108
& Surplus
Current 4,989 5,118 4,650 3,822 2,554
Liabilities
Other 120,432 119,254 101,097 87,448 70,886
Liabilities
Total 132,223 130,015 110,482 95,096 76,544
Liabilities
Assets
Fixed 330 333 341 353 347
Assets
Current 17,156 15,836 13,945 60,862 51,733
Assets
Other 114,736 113,845 96,195 33,880 24,463
Assets
Total 132,223 130,015 110,482 95,096 76,544
Assets

CASH FLOW FOR THE FINANCIAL YEAR FROM 2016 TO 2020

Mar2020 Mar2019 Mar2018 Mar2017 Mar 2016

Operatin 7,378 9,868 6,739 6,230 5,687

g
Activities
Investing -7,806 -10,181 -4,421 -5,175 -3,959
Activities

Financing 37 -337 -196 -235 -212

Activities

Others 17 0 0 -2 -2

Net Cash -372 -650 2,122 817 1,512

Flow

EQUITY ANALYSIS

BASIC EPS PIE CHART:

Per Share Ratios Mar Mar Mar Mar Mar

2020 2019 2018 2017 2016
Basic EPS (Rs.) 6.43 6.34 5.52 4.44 4.09
 Basic EPS

15%
24% Mar-20
Mar-19
16% Mar-18
Mar-17
24% Mar-16
21%

Analysis of EPS:

company with a steadily increasing EPS is often considered to be a reliable investment

option. Likewise, companies with faltering or irregular EPS are usually not preferred
by seasoned investors. Likewise in HDFC eps is increasing steadily and it is a positive
sign to invest.

Liquidity Ratios Mar Mar Mar Mar Mar

2020 2019 2018 2017 2016
Current Ratio (X) 3.44 3.09 3.00 15.92 20.25

Current Ratio

13% Mar-20

12% Mar-19
Mar-18
63% 12% Mar-17
Mar-16
Analysis of current ratio:
The current ratio measures a company's ability to pay current, or short-term, liabilities (debt
and payables) with its current assets (cash, inventory, and receivables). If a company has a
current ratio of less than one then it has fewer current assets than current liabilities. If a
company has a current ratio of more than one then it is considered less of a risk because it
could liquidate its current assets more easily to pay down short-term liabilities. HDFC current
ratio is of past five year is volatile, jumping from 15.92 to 3.00 but from past three year ratio
is stable.

Valuation Ratios Mar Mar Mar Mar Mar

2020 2019 2018 2017 2016
P/E (x) 68.64 59.70 82.33 0.00 0.00

P/E

0%
Mar-20
33%
39% Mar-19
Mar-18
Mar-17
Mar-16
28%

Analysis of P/E:
The P/E ratio essentially measures market expectations of a company. A high PE ratio suggests
that investors expect a high level of earnings in the future, and that growth will be strong.
HDFC Standard Life Insurance’s P/E tells us that market participants think the company will perform
better

Return Ratios Mar Mar Mar Mar Mar

2020 2019 2018 2017 2016
Return on Net worth / Equity 19.07 22.64 23.38 23.17 26.31
(%)
ROCE (%) 1.03 1.03 1.06 0.99 1.12
Analysis of ROE: a ROE is a measure of management's ability to generate income from the
equity available to it. ROEs of 15–20% are generally considered good.

Chart Title
30

25

20

15

10

0
Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

Return on equity ROCE

CORPORATE ACTIONS:

Dividend: HDFC Life Insurance Company Ltd. has declared 3 dividends since Dec. 15,
2017. The face value is Rs. 10. The company has not announced yet the bonus share
and stock spilt.

Ex-Date Type Dividend (Rs)

30 Jun, 2021 Final 2.02
14 Mar, 2019 Interim 1.63
15 Dec, 2017 Interim 1.36

Conclusion:

HDFC Life Insurance is one of the good performance company compare to its
competitors and despite the pandemic and lockdown the management has managed the
company well. The performance of the company on the stock market is good looking
at the past five year data we can see that the company growth is steady.