Buy ICICI Prudential Life Insurance, target Rs 520: Shailendra Kumar

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26 Aug, 2025 12:21

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Shailendra Kumar

ICICI Prudential Life Insurance is well placed to capitalise on India’s low insurance penetration. India currently accounts for less than 1.5 percent of the world’s total insurance premiums and about 2 percent of the world’s life insurance premiums despite being the second most populous nation. This throws huge opportunity for the company for growth for long term. Over The period of 2012 to Q32018, ICICI Pru has gained significant market share from 6 percent to 13.1 percent currently.

Strong premium growth, improving margin profile and consistent improvement in operating parameters suggest financial growth for future. Annualised premium equivalent has grown by 28 percent for FY17. The company’s value of new business (VNB) has grown at CAGR of 56 percent during FY2015-2018 period; for M9FY18, VNB grew by 82.2 percent to Rs 7.67 billion. Self funded business – no capital calls since FY 2009.

With strong solvency ratio at 252 percent and less capital requirement due to product mix, it is well positioned to take advantage of growth. The 13th month persistency ratio is high at 86.7 percent and also 49th month persistency ratio is high at 61.8 percent for 8MFY18.

Market cap to embedded value for ICICI Pru is 2.3 times which suggest comfortable valuations. Our target for the stock is Rs 520 with return of 31 percent.

Disclaimer: The author is Chief Investment Officer at Narnolia Securities. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.