A like-for-like valuation of HDFC Bank (HDFCBANK) and HDFC Life insurance Company (HDFCLIFE), each built from its own filed accounts and set side by side — price against estimated worth, on the same measures.
HDFC Life insurance Company is priced further below its estimated worth than HDFC Bank.
HDFC Life insurance Company trades 41% below our estimate of fair value, against 26% below our estimate of fair value for HDFC Bank. A wider discount is not automatically the safer buy — it can equally mean the market sees a risk the accounts do not show yet — but on price against estimated value, HDFC Life insurance Company is the cheaper of the two today.
Every figure below is drawn from each company's own filed statements. Estimated fair value is the per-share figure our engine will stand behind; where a business needs a model that does not reduce to one number, it is shown as “—”.
| HDFC BankHDFCBANK | HDFC Life insurance CompanyHDFCLIFE | |
|---|---|---|
| Current price | ₹722 | ₹530 |
| Market cap | ₹11.11L Cr | ₹1.15L Cr |
| Estimated fair value | ₹912 | ₹748 |
| Upside to fair value | +26% | +41% |
| P/E | 14.1 | 58.5 |
| P/B | 1.91 | 6.51 |
| Return on equity | —% | —% |
| Debt to equity | — | — |
| Valued on | Excess return — the correct lens for a bank | Embedded value — the correct lens for a life insurer |
A life insurer on embedded value against a bank on excess return.
Worked backwards from today's share price: the rate each company must sustain to justify what it costs, against what its own ten-year record supports.
Same method, same filed accounts — each of these works both companies through to a fair value.
HDFC Life insurance Company trades 41% below our estimate of fair value, against 26% below our estimate of fair value for HDFC Bank. A wider discount is not automatically the safer buy — it can equally mean the market sees a risk the accounts do not show yet — but on price against estimated value, HDFC Life insurance Company is the cheaper of the two today.
Each company is valued from its own filed financial statements — ten years of results — using the method that fits that business, then set beside the other on price, valuation multiples, return on equity and what today's share price already assumes. It is a like-for-like comparison of the workings, not investment advice.
No — and that is deliberate. HDFC Bank is valued on excess return — the correct lens for a bank, HDFC Life insurance Company on embedded value — the correct lens for a life insurer, because the two businesses do not work the same way. Forcing one model onto both would misstate at least one of them, so each is valued on the lens that fits it and only the conclusions are compared.