Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

HDFC Life Insurance / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/252" target="_blank" data-smartkarma-citation="entities:252:1">Housing Development Finance (HDFC IN)</a> and <a href="https://www.smartkarma.com/entities/22149" target="_blank" data-smartkarma-citation="entities:22149:1">Standard Life PLC (SL/ LN EQUITY)</a> plan to raise up to US$1.4bn by selling 14.9% of HDFC Standard Life in the IPO.The company is the third largest player in the private sector. Its larger peers <a href="https://www.smartkarma.com/entities/23608" target="_blank" data-smartkarma-citation="entities:23608:1">ICICI Prudential Life Insurance (IPRU IN)</a> and <a href="https://www.smartkarma.com/entities/25899" target="_blank" data-smartkarma-citation="entities:25899:1">SBI Life Insurance Co Ltd (SBILIFE IN)</a> listed earlier this year. Our fellow insight provider, <a href="https://www.smartkarma.com/profiles/497" target="_blank" data-smartkarma-citation="accounts:497">Vinay Patel</a> covered the IPO in his write-up earlier this week, <a href="https://www.smartkarma.com/insights/hdfc-life-ipo-review-expensive-valuations-for-a-business-model-similar-to-peers" target="_blank">HDFC Life IPO Review: Expensive Valuations for a Business Model Similar to Peers</a>. In this insight, we will compare the company to its peers in terms of business mix, higher exposure to protection and group business, and add to Vinay's comments on Valuations.

Housing Development Finance (HDFC IN) and Standard Life PLC (SL/ LN EQUITY) plan to raise up to US$1.4bn by selling 14.9% of HDFC Standard Life in the IPO.The company is the third largest player in the private sector. Its larger peers ICICI Prudential Life Insurance (IPRU IN) and SBI Life Insurance Co Ltd (SBILIFE IN) listed earlier this year. Our fellow insight provider, Vinay Patel covered the IPO in his write-up earlier this week, HDFC Life IPO Review: Expensive Valuations for a Business Model Similar to Peers. In this insight, we will compare the company to its peers in terms of business mix, higher exposure to protection and group business, and add to Vinay's comments on Valuations.

HDFC Standard Life IPO - Great Brand, Prudent Product Mix but Not Such a Great Price

Asia focused research insights & advisory, Asia Advisors

Vinay Patel

Asia focused research insights & advisory

Asia Advisors

Asia Advisors is an independent financial advisory and research firm working closely with corporates and institutions to provide consulting solutions & research insights. We provide advisory services including capital solutions, business strategy and investment insights.
Firm is headed by Vinay Patel who has close to two decades of experience in research and business development at large, international investment banks such as HSBC and ICICI Securities. Led research efforts in areas of Macroeconomics, Asset Allocation & Investment Strategy for close to a decade in global & domestic research teams. As a business head in Singapore, advised top global investment management firms & Portfolio managers in Asia for India related investments.
Vinay was recently joined by Swapnil Manish, an investment banker and ex-ecommerce entrepreneur with more than 12 years of experience. Swapnil was the TMT banker at BNP Paribas and was part of several large M&A and ECM transactions (Bharti-Zain, Bharti Infratel IPO, Schneider-Zicom among several others). He's also had a stint as an ecommerce entrepreneur having launched & led Mumbai's first online grocery player.

HDFC Standard Life Insurance Company IPO is an offer for sale of around 15% stake from the promoters at a premium valuation of Rs582.6bn ($9n). The company is among the top 3 private sector life insurance companies in India and has recorded strong growth over last 5 years. While the prospects for the company are good and promoter brands strong, we find the insurance company fairly similar in size and scale of operations to its other two listed peers (SBI Life &amp; ICICI Prudential). Unlike the valuation premium associated with the HDFC Bank &amp; HDFC  in the banking &amp; NBFC space respectively, the insurance company premium at 4.2xEmbedded Value (TTM) appears rich when equally strong peers trade between 3.3 - 3.6xEV. Last placement of 9% of HDFC Life shares was done in April 2016 to Standard Life valuing the company at Rs 185bn ( just a third of the IPO valuations!). Also, the market response to the recent insurance sector IPOs has been tepid with 2 out of 3 trading below the issue price. Large sized IPOs have not found favour even with speculators who are investing heavily in smaller IPOs and looking to exit upon strong listing gains. While the institutional buyers (QIBs) will invest into the offer as they seek to deploy surging inflows into their own funds, we believe that returns to investors will accrue only over the very long run as the company executes its strategy and delivers higher growth. Retail investors may well get better opportunities to invest into this name during market dips.

HDFC Standard Life Insurance Company IPO is an offer for sale of around 15% stake from the promoters at a premium valuation of Rs582.6bn ($9n). The company is among the top 3 private sector life insurance companies in India and has recorded strong growth over last 5 years. While the prospects for the company are good and promoter brands strong, we find the insurance company fairly similar in size and scale of operations to its other two listed peers (SBI Life &amp; ICICI Prudential). Unlike the valuation premium associated with the HDFC Bank &amp; HDFC  in the banking &amp; NBFC space respectively, the insurance company premium at 4.2xEmbedded Value (TTM) appears rich when equally strong peers trade between 3.3 - 3.6xEV. Last placement of 9% of HDFC Life shares was done in April 2016 to Standard Life valuing the company at Rs 185bn ( just a third of the IPO valuations!). Also, the market response to the recent insurance sector IPOs has been tepid with 2 out of 3 trading below the issue price. Large sized IPOs have not found favour even with speculators who are investing heavily in smaller IPOs and looking to exit upon strong listing gains. While the institutional buyers (QIBs) will invest into the offer as they seek to deploy surging inflows into their own funds, we believe that returns to investors will accrue only over the very long run as the company executes its strategy and delivers higher growth. Retail investors may well get better opportunities to invest into this name during market dips.  

HDFC Life IPO Review: Expensive Valuations for a Business Model Similar to Peers

India

HDFC Standard Life Insurance Company Limited is a life insurance firm. The Company offers protection, pension, savings and investment, and children's and women's plans to individuals. HDFC Standard Life Insurance serves customers in India and United Arab Emirates.

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HDFC Life Insurance (HDFCLIFE IN)

HDFC Standard Life IPO - Great Brand, Prudent Product Mix but Not Such a Great Price

Housing Development Finance (HDFC IN) and Standard Life PLC (SL/ LN EQUITY) plan to raise up to US$1.4bn by selling 14.9% of HDFC Standard Life in...

Sumeet Singh

HDFC Life IPO Review: Expensive Valuations for a Business Model Similar to Peers

HDFC Standard Life Insurance Company IPO is an offer for sale of around 15% stake from the promoters at a premium valuation of Rs582.6bn ($9n). The...

Asia Advisors

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52-week Range

Market Cap (USDm)

P/E

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