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What Do Analysts Think About HDFC Life Insurance Company Limited's (NSE:HDFCLIFE) Long Term Outlook?

Simply Wall St

The latest earnings update HDFC Life Insurance Company Limited (NSE:HDFCLIFE) released in March 2019 revealed that the company gained from a strong tailwind, eventuating to a double-digit earnings growth of 15%. Below, I've presented key growth figures on how market analysts predict HDFC Life Insurance's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

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Check out our latest analysis for HDFC Life Insurance

Market analysts' consensus outlook for the upcoming year seems buoyant, with earnings growing by a robust 12%. This growth seems to continue into the following year with rates arriving at double digit 32% compared to today’s earnings, and finally hitting ₹20b by 2022.

NSEI:HDFCLIFE Past and Future Earnings, May 21st 2019

While it is useful to understand the rate of growth each year relative to today’s level, it may be more insightful determining the rate at which the company is moving every year, on average. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of HDFC Life Insurance's earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I've appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14%. This means that, we can presume HDFC Life Insurance will grow its earnings by 14% every year for the next few years.

Next Steps:

For HDFC Life Insurance, I've compiled three key aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is HDFCLIFE worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HDFCLIFE is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HDFCLIFE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.