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This HDFC Group Company Stock Hit 52-Week Low, Should You Buy?
HDFC Life Insurance stock has crashed along with stocks from the sector. The shares of the company hit a new 52-week low of Rs 482 on the NSE. This was following the recommendations made in the Union Budget 2023-24, which was not favourable for the stock.
Double blow for life insurers from Union Budget 2023-24
According to Emkay Global, Union Budget FY24, presented in the Indian Parliament on 1-Feb-2023, appears to have dealt a double blow to the life insurance sector via a couple of crucial changes on the personal income-tax front. "By tweaking the 'New Tax Regime' (launched in the FY21 Budget), the government has attempted to make it attractive - it has brought down taxes under this 'exemption-free' regime, thus reducing the tax saving value of tax- saving instruments (such as life insurance policies) under Sections 80C, 80D, etc. And by removing exemptions under Sec10(10D) of the Income Tax Act, the Budget has also proposed taxing the maturity & surrender amount of Non-ULIP policies (purchased after 1-Apr-2023), if the total premium paid by an individual under such polices is more than Rs 5lakh (Rs0.5mn) in a year," the brokerage has said.
Should you buy the stock of HDFC Life?
Emkay Global has a buy call on the stock of HDFC Life with a price target of Rs 560, implying a decent uptick on the stock from current levels of Rs 480. Sharekhan on he other hand has a buy call on the stock to Rs 720, though it may not have factored in the budget recommendations as the report was prepared before the Union Budget.
"We expect HDFC Life to deliver 20% VNB CAGR over FY22-25E, 19-20% operating RoEV, with a steady improvement in market share and margins. The company remains the leader in new product launches. We have fine tuned our estimates and our target multiple. We maintain a Buy with a revised price target price target of Rs. 720," the brokerage has sad in its report dated Jan 27, 2023.
Disclaimer
The stock has been picked from the brokerage report of Emkay Global and Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.
