What is the story about?
Brokerage firm Motilal Oswal has initiated coverage on newly listed Canara HSBC Life Insurance, in its latest note on Tuesday, January 13.
Motilal Oswal initiated coverage with a 'Buy' rating and a price target of ₹180 per share, which implies a potential upside of 24% from Monday's closing levels.
For its bull case, Motilal Oswal has a price target of ₹220 by financial year 2028, which is implying a potential upside of 51% from Monday's close.
The brokerage said Canara HSBC Life is among India's top 10 life insurers and has a well-diversified product mix. In H1FY26, ULIPs accounted for 50% of the business, non-participating products contributed 34%, while participating and protection products made up 8% each.
The company's distribution is largely bancassurance-led, with Canara Bank accounting for 70% of business and HSBC contributing 15% during the period.
Over the past decade, the insurer has outperformed both the overall industry and the private-sector segment, delivering a 22% CAGR in annualised premium equivalent (APE).
As a result, its market share has expanded by 90 basis points at the industry level and 110 basis points within the private segment.
Motilal Oswal believes the life insurance industry is well-placed for sustained growth, led by rising penetration, GST exemption tailwinds, a narrowing protection gap in India and the likelihood of favourable regulatory changes such as risk-based solvency norms and composite licences.
Within this backdrop, the brokerage expects Canara HSBC Life to continue gaining market share as it deepens penetration among Canara Bank customers, scales up cross-selling through the HSBC channel, builds out its agency network and forges relationships with new-age distributors.
Motilal mentioned that Canara HSBC Life currently has just 1.7% penetration among Canara Bank's 120 million customers, while branch productivity stands at ₹1.6 million, compared with over ₹5 million for other private banks.
With Canara Bank stepping up investments in digital tools for customer segmentation, the brokerage sees a strong growth runway for the insurer.
Motilal Oswal expects Canara HSBC Life to deliver a CAGR of 20% in APE and 23% in value of new business (VNB) over FY25-28E. VNB margins are estimated to expand by about 50 basis points annually over the next few years, aided by a favourable product mix and scale benefits, partly offset by investments in the agency channel.
Separately, the three-month shareholder lock-in for Canara HSBC Life Insurance ended on Tuesday, making about 35.4 million shares, or roughly 4% of the outstanding equity, eligible for trading.
These shares are valued at around ₹521 crore.
Shares of Canara HSBC Life Insurance declined 5% on Tuesday. Despite the fall, the stock is up nearly 40% from its issue price of ₹106.
Motilal Oswal initiated coverage with a 'Buy' rating and a price target of ₹180 per share, which implies a potential upside of 24% from Monday's closing levels.
For its bull case, Motilal Oswal has a price target of ₹220 by financial year 2028, which is implying a potential upside of 51% from Monday's close.
The brokerage said Canara HSBC Life is among India's top 10 life insurers and has a well-diversified product mix. In H1FY26, ULIPs accounted for 50% of the business, non-participating products contributed 34%, while participating and protection products made up 8% each.
The company's distribution is largely bancassurance-led, with Canara Bank accounting for 70% of business and HSBC contributing 15% during the period.
Over the past decade, the insurer has outperformed both the overall industry and the private-sector segment, delivering a 22% CAGR in annualised premium equivalent (APE).
As a result, its market share has expanded by 90 basis points at the industry level and 110 basis points within the private segment.
Motilal Oswal believes the life insurance industry is well-placed for sustained growth, led by rising penetration, GST exemption tailwinds, a narrowing protection gap in India and the likelihood of favourable regulatory changes such as risk-based solvency norms and composite licences.
Within this backdrop, the brokerage expects Canara HSBC Life to continue gaining market share as it deepens penetration among Canara Bank customers, scales up cross-selling through the HSBC channel, builds out its agency network and forges relationships with new-age distributors.
Motilal mentioned that Canara HSBC Life currently has just 1.7% penetration among Canara Bank's 120 million customers, while branch productivity stands at ₹1.6 million, compared with over ₹5 million for other private banks.
With Canara Bank stepping up investments in digital tools for customer segmentation, the brokerage sees a strong growth runway for the insurer.
Motilal Oswal expects Canara HSBC Life to deliver a CAGR of 20% in APE and 23% in value of new business (VNB) over FY25-28E. VNB margins are estimated to expand by about 50 basis points annually over the next few years, aided by a favourable product mix and scale benefits, partly offset by investments in the agency channel.
Separately, the three-month shareholder lock-in for Canara HSBC Life Insurance ended on Tuesday, making about 35.4 million shares, or roughly 4% of the outstanding equity, eligible for trading.
These shares are valued at around ₹521 crore.
Shares of Canara HSBC Life Insurance declined 5% on Tuesday. Despite the fall, the stock is up nearly 40% from its issue price of ₹106.
