The life insurance sector in India has been growing rapidly, with premium income crossing ₹8.2 lakh crore in FY2024. However, despite being in the same industry, Canara HSBC Life and HDFC Life have different market perceptions, with HDFC Life trading at a premium valuation and being seen as a trusted industry leader. Canara HSBC Life, on the other hand, is valued at a discount, despite having strong bank partners like Canara Bank and HSBC.
The valuation gap between the two companies is significant, with Canara HSBC Life’s IPO implying a valuation that is roughly 40-45% lower than HDFC Life’s market value per embedded value and other multiples. This discount has surprised many investors, given Canara HSBC’s steady profit history. The market has priced the IPO using a conservative multiple, leaving room for debate on whether the discount is fair or too steep.
One reason for the valuation difference is the business mix and profitability of the two companies. HDFC Life earns higher VNB margins than many peers, with margins historically being above many rivals. Canara HSBC’s VNB margins are lower, due to a product mix that includes more ULIPs and lower-margin savings products. ULIPs generate lower upfront margins than protection or traditional savings plans, reducing valuation multiples tied to future profit streams.
Another factor contributing to the valuation difference is the embedded value and growth profile of the two companies. Embedded value captures the present value of in-force business plus net assets and is central to insurer valuation. Canara HSBC’s embedded value has improved strongly from FY2023 to mid-2025, but HDFC Life’s absolute EV and scale remain much larger. Scale matters, and a bigger EV gives room to sustain higher valuations.
Distribution strength and brand are also important factors in life insurance. HDFC Life has a wide mix of agency, bancassurance, and digital channels, lowering dependence on any single partner. Canara HSBC leans more on bancassurance, giving a steady flow of customers but also concentrating risk in bank partnerships. Investors prefer diversified distribution, seeing it as less risky. Brand recognition is another factor, with HDFC Life’s brand being well-known and Canara HSBC’s brand being strong within bank networks but lacking retail visibility.
Despite the discount, Canara HSBC has clear strengths, including steady profits for over a decade, healthy solvency ratios, and expanding embedded value. The company has reported improvements in assets under management and a near-99% claim settlement record. These facts argue that some of the discounts may be temporary. If the company shifts its product mix towards higher-margin lines and expands distribution beyond core bank partners, valuation could re-rate.
For long-term investors, the decision depends on risk appetite. Those who value scale, brand, and proven public track records may prefer HDFC Life. Those willing to bet on execution and margin improvement might find Canara HSBC attractive at its IPO price band. However, analysts view the discount as a mix of risk premium and conservative IPO pricing, and many say the valuation partly reflects differences in margins, product mix, scale, and liquidity. Ultimately, the decision to invest in either company depends on individual risk tolerance and investment goals.