IPO listed on 17 Oct'25
Canara HSBC Life Insurance Company Ltd
Minimum Investment
₹ 14,840 / 140 shares
Issue price
₹ 106
Listing price
₹ 106
Listing gains
0 (0%)
Listing on
Oct 17, 2025
Our Verdict:
Avoid
- Canara HSBC Life Insurance Company Ltd (CHLICL) has demonstrated steady growth over the past two years, supported by improvements in Assets Under Management (AUM), Annualized Premium Equivalent (APE) and Embedded Value (EV).
- Despite these positives, the company’s heavy dependence on bancassurance channels and a product mix skewed towards unit-linked insurance plans (ULIPs) raises concerns about its ability to sustainably expand market share.
- From a valuation perspective, the IPO appears fully priced with a P/E multiple of around 86x. It neither provides a meaningful discount nor offers a distinctive competitive advantage when compared to peers.
- While CHLICL benefits from a strong distribution network, sound financial position and growing digital adoption—factors that can drive scalability in the long run—its modest earnings profile and over-reliance on bancassurance temper the overall investment case.
- Taking these factors together, the IPO does not present a compelling risk-reward opportunity at current valuations. Investors may be better off avoiding this issue for now.
About the company
Founded in
25 Sep'07
Managing director
Anuj Mathur
- CHLICL is a private life insurance company jointly promoted by Canara Bank and HSBC Insurance (Asia-Pacific) Holdings. It operates as a private life insurer with a strong focus on bancassurance-led distribution, leveraging the extensive network (~9,849 branches) of its promoter banks to reach customers across urban, semi-urban and rural markets.
- CHLICL’s offerings span across savings and endowment plans, term insurance, retirement solutions, group credit life and protection plans, as well as the government-backed Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). As of June 30, 2025, it has extended life insurance coverage to 10.51 million lives. Its product portfolio includes 20 individual products, 7 group products and 2 optional rider benefits, in addition to policies offered under the PMJJBY scheme.
STRENGTHS
- Strong Market Position: CHLICL ranks third among public sector bank–promoted life insurers. Between FY22 and FY25, its individual weighted premium income (WPI) grew at the third highest rate among bank-led insurers, with the second highest year-on-year growth in FY25 within its peer set.
- Robust AUM Growth: Assets under management expanded at a CAGR of 17%, rising from Rs 30,204.4 crore in FY23 to Rs 41,166.41 crore in FY25, supported by a growing customer base and healthy inflows across product lines.
- Consistent EV Growth: Embedded Value (EV) — a key measure of the present value of future profits — increased at a CAGR of 20%, from Rs 4,271.93 crore in FY23 to Rs 6,110.74 crore in FY25, and further to Rs 6,352.64 crore by June 30, 2025. This highlights a strong in-force portfolio and long-term profitability.
- Sound Capital Position: With a solvency ratio of 200.42% as of June 2025, CHLICL stands comfortably above the IRDAI’s mandated 150%, reflecting its ability to meet policyholder obligations and support future growth.
- Improving Persistency: Persistency — a critical retention metric — improved markedly to 84.25% (13th month) in Q1FY25, up from 75.3% in FY23, ranking among the best in the bank-led insurer category. The 61st-month persistency also strengthened, reflecting higher long-term renewals and loyalty.
- High Claims Efficiency: CHLICL reported a death claim settlement ratio of 99.4% in FY25, with an average settlement time of just 5.33 days — demonstrating efficiency and reinforcing customer trust.
- Superior Customer Experience: The Net Promoter Score (NPS) improved significantly from 50 in March 2023 to 70 in March 2025, and further to 75 by June 2025, highlighting enhanced service quality and customer advocacy.
RISK FACTORS
- Geographic Concentration: A significant share of new business premium is concentrated in 5 states — Karnataka (22.48%), Maharashtra (11.97%), Kerala (9.56%), Uttar Pradesh (8.88%) and Tamil Nadu (8.42%). Any adverse political, social, or economic developments, natural calamities, or regulatory changes in these regions may materially affect business performance.
- Legal Contingencies: CHLICL, along with certain promoters and directors, is involved in legal proceedings amounting to approximately Rs 65,456 crore. Any unfavorable judgments could adversely impact financial performance, operations, and reputation.
- Lower VNB Margins: CHLICL’s Value of New Business (VNB) margin lags peers. Improvement is contingent upon higher new business volumes, a favorable shift in product mix towards high-margin offerings and operational efficiencies.
- Contingent Liabilities: As of June 30, 2025, CHLICL has contingent liabilities of Rs 319.88 crore (20.77% of net worth) not accounted for in the financials. If crystallized, these could materially affect financial condition.
- Intense Competition: The life insurance sector is highly competitive, with stronger players like SBI Life, HDFC Life, and ICICI Prudential enjoying superior brand recognition, scale, and digital penetration.
- Bancassurance Dependency: More than 90% of new business originates from Canara Bank and partner banks. This reliance creates concentration risk in case of underperformance, regulatory restrictions or strained partnerships.
- Market Volatility Exposure: A substantial proportion of business comes from ULIPs, making earnings sensitive to equity market fluctuations.
- Modest Profitability Metrics: FY25 Earnings per Share (EPS) at Rs 1.23 and Return on Net Worth (RoNW) at 7.97% are lower than top peers, highlighting the need for efficiency improvements.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 2,517.50 crore
Fresh Issue
₹ -
OFS
₹ 2,517.50 crore
Price range
₹ 100 - 106
Lot size
140 shares
Issue Objective
This issue is entirely an Offer for Sale (OFS), meaning the company itself will not receive any funds from the proceeds. Instead, all proceeds will go directly to the selling shareholders.
Dates
Bidding open
10 Oct'25
Bidding close
14 Oct'25
Allotment date
15 Oct'25
Refund date
16 Oct'25
Listing
17 Oct'25
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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