Strong currency permits to pay such a premium While we see a possibility of operating parameters improving materially, we think valuation of 2.5x trailing EV is not justified for such a sub-par business, especially given that weaker players (beyond top 8) have been struggling. Peers like SBI Life / IPRU Life trade at 3.2x/3.4x trailing EV, but have strong brand positioning, largest banca distribution and significant scale advantage. That said, HDFC Life's strong currency (trading at 5.1x trailing EV) does permit the company to pay a premium for such an acquisition especially given the small size of the acquisition (only 4.6% of its market cap), in our view. Exide Life highlights The merger should lead to EV accretion of ~10% for HDFC Life while EV growth of Exide Life has just been 8% over FY18-21F. Management highlighted that it does not expect a large adjustment on EV (&LT5%) and even remains well provided for COVID-19-related mortality costs.