After a day of losing streaking indices are once again firm in trade on January 7, 2022 with Nifty Bank seeing strength for yet another day to the tune of over 1 percent. Meanwhile, among Nifty sectoral indices banking pack followed by the IT pack is the most resilient in trade today.
Now here we will discuss one counter that is trading close to its 52-week low price and considering its last traded price of Rs. 653, it is just 4% away from its 52-week low price of Rs. 627 per share.
So, as the stock is trading close to its lowest price in a year, here is what can be the take on the stock?
HDFC Life Insurance -Exide Life Deal- To strengthen HDFC Life’s overall market
The company in an exchange filing informed that further to our disclosure dated September 03, 2021, please note that the Insurance Regulatory and Development Authority of India has vide its letter dated December 31, 2021, provided its approval for the acquisition of 100% of the equity share capital of Exide Life Insurance Company Limited by the Company and granted in-principle approval for the proposed merger of Exide Life Insurance Company Limited into the Company.
The acquisition and the intended merger will ramp up the scale of the company's proprietary channels, augment presence in South India and across tier 2 and tier 3 locations. So, the company's overall market shall see an expansion.
Tailwinds for the sector
The centre's support has been tremendous, in February last year the centre has infused a sum to the tune of Rs. 3000 crore into state-owned general insurers for improving the overall financial health of the sector.
Further as per IBEF, insurance reach is still highly low in the country. Overall insurance penetration has been (premium as percentage of GDP at 4.2 percent in 2021. Thus offering a huge underserved market.
Also, the unending corona and its variant epidemic will foster fresh business premium thus enabling growth.
Deloitte’s 2022 Insurance Industry outlook
The big 4 taxation concern as per its research has come to the conclusion that despite Covid concerns, insurers in general expect more rapid growth next year-although non pandemic challenges around regulation, talent, sustainability, and evolving consumer preferences may present speed bumps.
"Flexible work models, balancing automation with the need to maintain a human touch with customers and being more proactive in bolstering stakeholders' trust should be among the industry's strategic priorities", added the report.
HDFC Life- Buy for a target price of Rs. 833 per share, says Choice Broking
Brokerage firm has given a 'Buy' on the scrip for a target price of Rs. 833 per share i.e. an upside of 27 percent from here. Choice Broking values HDFC LIFE at P/EV multiple of 4.4x (based on FY23 EV) to arrive at a target price of Rs 833 and upside potential of 30.3%. Also, its business premium has gone higher by 12.3 percent YoY to Rs. 6596 crore.
Stock market investments are risky, markets are overly priced. The above story is not a recommendation to buy in shares and investors and readers should engage in their own due-diligence.