The investors of HDFC Life have news related to the stock in the market. Let’s find out more as we go ahead with the article.
The share of HDFC Life has seen a sharp fall in the past trading session. Hence, we will now look on what are the reasons behind the fall, the other factors that might affect it, and the opportunities coming ahead for HDFC Life.
Reasons for the fall:
- The foreign promoter of HDFC Life which is Standard Life is regularly reducing its stake in the company from the time of listing.
- As of March 2021, Standard Life had a stake of 8.88% in HDFC Life.
- The company has sold a 4.99% stake in the company at the rate of Rs. 673 per share on June 29, 2021.
- Now, Standard Life holds only a 3.89% stake in HDFC Life.
- Whenever a block deal happens, the holding company will receive a price that is around 20% lower than the prevailing share price. This is due to the gap in the demand and supply in the running market.
- The second wave of COVID 19 has majorly impacted many people in India. Due to this, the claims count has increased and the company has to do a higher number of settlements which will impact the profitability and margins.
- The largest opportunity of the insurance sector in India is that it is a highly under-penetrated business and HDFC Life has taken a good lead in the private area.
- As the per capita income of the people of the country rises, the demand for insurance is likely to take benefit out of it.
- The pandemic has created a lot of awareness among the individuals and people are now starting to understand the importance of insurance.
The company is currently trading at a very premium valuation which is supported by its continuously rising market share and availability of secular growth in a particular sector. The company is a market leader in the private sector as well. These short-term corrections should not change the long-term investment strategy for an individual.