SUSHIL FINANCE IPO UPDATE - CANARA HSBC LIFE INSURANCE COMPANY LIMITED

IPO Details

Our View: Subscribe for Long Term Horizon

Company Overview

Canara HSBC Life Insurance Company Ltd. (“Canara HSBC”) is a private life insurer in India and is promoted by Canara Bank and HSBC Insurance (Asia-Pacific) Holdings Limited (“INAH”). It is ranked 3rd amongst public sector bank led life insurers in India according to the CRISIL Report, based on the number of lives covered for Fiscal 2025.

The company offers a comprehensive range of life insurance products tailored for both individual and group and primarily include saving and endowment plans, term (pure protection) plans, retirement solutions, group credit life and protection plans and the Pradhan Mantri Jeevan Jyoti Bima Yojana (“PMJJBY”).

Their individual weighted premium income (“WPI”) collected by Canara HSBC grew the 3rd highest amongst bank-led insurers between Fiscal 2022 and 2025 and was the 2nd highest year-on-year growth amongst its Peer Set for Fiscal 2025. Canara HSBC has the 3rd highest assets under management (“AUM”) amongst public sector bank-promoted led life insurers, as of March 31, 2025.

Their distribution agreement with HSBC India, one of its group companies, offers them significant advantages as HSBC, and is ranked as the 2nd largest foreign bank by total assets in India as of March 31, 2025, managing 26 branches in India, as of January 17, 2025, and has also received approval for 20 new branches in January 2025. As of March 31, 2025, Canara Bank managed 9,849 branches across India. The company also has access to the branch network of 7 regional rural banks through distribution agreements.

Key Highlights

Objects of the Issue

Our View

Incorporated in 2007, Canara HSBC Life Insurance Company Ltd (“Canara HSBC”) is promoted by Canara Bank and HSBC Insurance (Asia-Pacific) Holdings Limited (“INAH”). Canara Bank, which holds a 51% stake, is the fourth-largest public sector bank in India by total assets as of FY25, while INAH holds a 26% stake in the company.

Indian life insurance industry has seen a change in product preference from both insurer as well as customer point of view in the last decade. Like the trend in the total premium, the new business premium also witnessed growth of 18.3% CAGR and 14.7% CAGR for bank led and non-bank led players respectively during Fiscal 2014 to 2025. Crisil Intelligence forecasts total premium for life insurers to log 8% to 10% CAGR over the next four years ending fiscal 2028 while bank led insurers are expected to grow faster at 10% to 12% CAGR over the same period.

On the financial front from FY23- FY25, the company’s topline was inconsistent and bottomline presented growth at CAGR 13.26%. There was improvement of NPS from 50 on March 31, 2023, to 70 on March 31, 2025, reaching 75 on June 30, 2025. Its solvency ratio of 200.42% (June 2025) comfortably surpasses the IRDAI-mandated 150%, indicating robust capital adequacy. Its persistency ratio for Fiscal 2025 was the 4th highest amongst bank led insurers. It operated on PAT margin of around 50% at FY25.

The issue is priced at a P/BV of 6.54 based on its NAV of Rs. 16.21 as at Q1FY26 and the P/E stands at ~86x at FY25. As per RHP industry average P/E is around 79x. The issue is fully priced.

The company has been able to grow the brand, business presence and expertise by leveraging their parentage. India’s life insurance penetration remains below 4% providing huge untouched potential as financial awareness and middle-class income rise. Looking at all the factors, risks, opportunities and valuation, investors can invest in a stable compounder company with Long term horizon to the issue.