IPO Size: Rs. 2,517 cr, Entirely Offer for Sale (OFS)

• 58% of OFS or Rs. 1,460 cr by the promoter Canara Bank (51% stake to drop to 37% post IPO)
• 40% of OFS or Rs. 1,007 cr by investor shareholder PNB (23% to shrink to 13%)
• A small OFS of Rs.50 cr by foreign promoter HSBC (26% post IPO stake)

Price band: Rs. 100-106 per share

M cap: Rs. 10,070 cr, implying 25% dilution

IPO Date: Fri 10^th Oct to Tue 14^th Oct 2025, Listing Fri 17^th Oct 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Bancassurance-led Life Insurance Company

Canara HSBC Life Insurance is 17 year old life insurer in the 24-player industry, having 1.8% market share, Rs. 43,600 cr assets under management (AUM), Annualised Premium equivalent (APE) of Rs. 2,400 cr in FY25, 54% of which is unit-linked insurance plan (ULIP).

In the highly competitive industry, company’s distribution reach is very limited, with 85% of individual premium generated from promoter banks - Canara (75%) and HSBC (11%). Since insurance is a ‘push’ product in India, low distribution network is a key weakness.

Adverse Product Mix leading to Low Margins

Canara HSBC Life’s Value of New Business (VNB) rose 18% YoY to Rs. 446 cr in FY25. Q1FY26 VNB stood at Rs. 96 cr, but surprisingly, Q1FY25 VNB is not disclosed. 19% VNB margin, essentially determining the profitability of business, is the lowest among the listed peers – ICICI Pru 23%, Max Life 24%, SBI Life 27%, HDFC Life 25%, due to poor product mix. Protection products, which clock 10x margin vis-à-vis ULIPs, account for <1% of new business premium, as against double digit for peers. Thus, Canara HSBC’s profitability outlook remains dull.  

Peer Comparison

On Rs. 6,535 cr embedded value as of 30.6.25, Canara HSBC Life Insurance IPO is offered at a Price to Embedded Value (P/Emb) multiple of 1.6x and a VNB multiple, the PE equivalent for life insurers, of 8.3x.

ICICI Prudential Life is trading at a P/Emb of 1.7x and VNB multiple of 16x, despite 7x AUM of ICICI Pru, 23% VNB margin and 16% of APE from protection products. HDFC Life, which clocks 10x NBP, is ruling at P/Emb of 2.8x and VNB multiple of 26x for higher VNB margin and so is SBI Life is ruling at P/Emb of 2.4x and VNB multiple of 18x, for industry-leading VNB margin of 27%.

Thus, Canara HSBC’s P/Emb value is similar to ICICI Pru, but VNB multiple is nearly half of peers, justified by its lower profitability.

Sector not in Favour

While GST exemption on insurance policies is positive for the sector, valuation multiple of listed life insurers in India have witnessed contraction over the years. Return track record has also been a mixed bag, with SBI Life and Max Financial rewarding investors, but HDFC Life and ICICI Pru delivering lower-than-index returns.