Canara HSBC Life Insurance Company Limited – IPO Analysis Report

Canara HSBC Life Insurance IPO: Bank-led Banca Strength, Profitable Track—Should You Subscribe? Price band set at Rs 100–106 per share; IPO opens October 10, 2025, closes October 14, 2025, tentative listing October 17, 2025 (NSE & BSE).

About the Company and Its Business Operations

Incorporated in 2007, Canara HSBC Life Insurance is a private life insurer promoted by Canara Bank and HSBC Insurance (Asia-Pacific) Holdings. The company operates a bancassurance-led model, accessing ~9,849 Canara Bank branches and HSBC’s network, and sells across linked and non-linked (participating/non-participating) life, pension and health categories. It has maintained 13 consecutive years of profitability, strong claim-settlement (FY25: 99.38 per cent) and a high solvency position among bank-led peers. Product mix is skewed to non-linked non-par and participating life; distribution is predominantly corporate agency/bancassurance. Assets under management rank among the highest within PSU bank-led peers as of March 31, 2025.

Industry Outlook

India’s life insurance market remains under-penetrated versus global peers (India ~3.5 per cent share of global premiums in CY2023). Post-COVID, the industry has seen robust protection growth; sum assured for the sector increased from Rs 58 trillion (March 31, 2022) to Rs 103 trillion (March 31, 2025) (~21 per cent growth). Bank-led players hold ~70–75 per cent APE share, aided by strong distribution. Globally, premium growth in CY2023 was 3.90 per cent; India grew 2.90 per cent, with room for convergence as financialisation deepens. Listed private peers’ Embedded Value and VNB roughly ~2.8x and ~2.7x (FY19–FY25) growth underscores long-term compounding potential.

Objects of the Issue

The objectives of the Offer are to carry out an Offer for Sale of up to 23.75 crore equity shares of face value ₹10 each, with the entire proceeds going to the selling shareholders as there is no fresh issue of shares. Additionally, the Offer aims to achieve the benefits of listing the company’s equity shares on the stock exchanges, thereby enhancing its brand visibility. The total Offer size is ₹2,517.50 crore at the upper price band.

SWOT Analysis

Strengths: Deep bancassurance access via Canara Bank; 13 years of profitability; FY25 claim settlement 99.38 per cent; healthy solvency; improving individual WPI growth (FY24–FY25 ~28.01 per cent).

Weaknesses: Lower VNB margins versus listed peers; relatively high operating costs; dependence on banca channels.

Opportunities: Large protection gap, rising sum assured, under-penetration, and IRDAI’s digital reforms.

Threats: Regulatory risks, competitive pricing, market-linked volatility.

IPO Details – At a Glance

Financial Performance

Profit & Loss (Rs crore)

Balance Sheet (Rs crore)

Peer Comparison (FY25)

Outlook & Relative Valuation

The company’s post-issue valuation appears moderately rich compared with peers. At a P/E of 107.53x FY25 earnings, Price-to-Book of 6.64x, and Price-to-Embedded Value (P/EV) of ~2.53x, it commands a premium to peers such as SBI Life (73x P/E, 10.2x P/B, 2.4x P/EV), HDFC Life (85.8x P/E, 9.52x P/B, 2.8x P/EV) and ICICI Prudential Life (68.8x P/E, 6.91x P/B, 2.0x P/EV). The premium is justified partly by its strong solvency ratio, steady profitability, and growing market share within the bank-led segment. However, return ratios remain lower — RoNW at 7.97 per cent versus 15.1 per cent for SBI Life — implying scope for improvement. While the Offer for Sale nature limits fresh capital inflow, the brand strength of Canara Bank and HSBC, along with sustained bancassurance growth, may help justify valuations over the long term. Investors may, however, wait for more attractive entry points post-listing given the rich pricing.

Recommendation

Despite strong parentage and healthy solvency, the IPO appears expensive at 107.5x FY25 earnings and 6.6x P/B. With modest return ratios and the entire issue being an OFS offering no capital infusion, investors may avoid and wait for a more attractive entry post-listing.