HDFC Life is set to release its Q4 earnings report later in the day. The life insurer’s profit after tax is projected to rise 22.5% on year, with gross premium income expected to grow 6.5%.

HDFC Life Insurance Company bagged an upgrade from foreign brokerage Citi, ahead of the company’s quarterly earnings, due for a release later today. Citi upgraded its rating for HDFC Life to a ‘buy’, assigning the stock a target price of Rs 720 per share, projecting a 19 percent upside potential.

Shares of HDFC Life rose over 2 percent following the upgrade and at 09.17 am, were trading at Rs 618 on the NSE.

Citi’s rating upgrade is hinged on HDFC Life’s underperformance in comparison to not just its listed peers, but also the Nifty 50 in the past one year.

Meanwhile, Citi also expects the company’s efforts to strengthen its agency base in FY24 to trigger some positive impact on its earnings. “Any likely revival in growth at HDFC Bank will further aid prospects for HDFC Life,” Citi stated.

HDFC Life is expected to report a modest single-digit growth in net profit for the January-March quarter, despite strong premium income. Analysts feel competition and market changes are driving insurers towards low-margin products, impacting profit margins. A consensus of analysts predict a 6.1 percent year-on-year growth in HDFC Life’s Q4 net profit to Rs 382.1 crore, primarily influenced by a slowdown in the value of new business (VNB).

Its gross premium income is expected to grow 16 percent year-on-year to Rs 22,740 crore. This increase is primarily driven by a significant 48.6 percent surge in renewal premium, which policyholders pay periodically, typically annually, to maintain their policies.