GST impact caps HDFC Life’s Q2 profit growth at 3%

HDFC Life Insurance reported a 3.27% rise in standalone net profit to Rs 447 crore for the July–September quarter of FY26, compared to Rs 433 crore in the same period last year due to a one-time impact from the Goods and Services Tax (GST) exemption changes on existing policies.

Net premium income rose over 13% year-on-year to Rs 18,777.31 crore, against Rs 16,569.70 crore in the corresponding quarter last year.

“We cannot reprice the policies that we have already sold and if we take GST impact out, profit growth would be close to 14.8% during the quarter,” said Vibha Padalkar MD and CEO HDFC Life. “Profit is looking subdued, but it is only the one-time GST impact.”

The company expects the GST related drag to fade. “The GST impact will progressively go down and become zero by the time we end this financial year,” said Padalkar.

The insurer’s value of new business (VNB) margin for the quarter stood at 24.1%, compared with 24.3% in the same period last year. “Adjusted for GST, it was 25%,” Padalkar said.

The company has seen an increase in expense of management to 21.3% from 20.9% on increased expenses and commission. The company has reached a branch count of 675, adding over 200 branches over the last 24 months.

The company’s solvency ratio stood at 1.75x, down from 1.8x, but still well above regulatory requirements. The company has secured board approval to raise Rs 750 crore, which will add about 700 basis points to our solvency. The company is planning to raise it in the third quarter in the form of sub-debt. “We retired Rs 600 crore of old sub-debt, and that reduced solvency,” said Padalkar.

Persistency for both the 13th and 61st month declined during the quarter. “It’s due to product mix and the higher-ticket segment seeing some slowdown,” said Padalkar. “Also, because of GST changes, some people delayed premium payments to avail of the benefit. We will start clawing back some of it.”