Abrdn divests entire 1.6% stake, exits HDFC Life Insurance

During the block deal window on Wednesday, about 3.6 crore shares equivalent to a 1.6 percent equity, of HDFC Life Insurance were traded. While the buyers were not known immediately, earlier reports suggested that Abrdn (formerly known as Standard Life), was likely to sell its entire stake and exit the company.

According to the terms obtained by Bloomberg, the shares of the private insurer were offered at Rs 563-585. After the deal, the stock opened higher and was quoting at Rs 590.05 with trading volumes of over 32 lakh shares at 9:30 am.

The stock had been impacted from the aftershocks of the Union Budget proposals, which included taxing proceeds of insurance policies with premiums in excess of Rs 5 lakh and introduction of the new tax regime, which removed almost all exemptions.

According to analysts, the company is now investing to grow lower-ticket policies to offset a slowdown in higher ticket non par business.

The Financials

For Q4, HDFC Life reported an almost flat net profit of Rs 359 crore, as against Rs 357 crore last year, even though net premium income increased 36 percent to Rs 19,426 crore. As of March 31, 2023, the company's embedded value amounted to Rs 39,527 crore, with an operating return on embedded value of 19.7 percent for FY23.

The stock currently has 24 Buy calls, 3 Hold and 4 Sell calls on it. The consensus 12-month target for the stock is Rs 638, suggesting an 8 percent potential increase from its current value.