Shares of ICICI Prudential Life Insurance sank over nine percent in the morning session on January 22, after the insurance player saw a miss on margins in the October-December period (Q3) of the current financial year (FY25).
While the firm's net profit surged 43 percent to Rs 326 crore, compared to Rs 227 crore reported during the same quarter in the previous financial year, its VNB (value of new businesses) margins were lower than expectations.
Growth spike in the Group fund management business and stronger growth in the ULIP segment in Q3 led to ICICI Pru Life logging a weaker margin performance in Q3 and 9MFY25.
The VNB margin fell 220 basis points QoQ to 21.2 percent as the product mix changed in favour of low margin linked business and group savings business. The management said that VNB margins decreased mainly due to product mix, and no material changes took place on cost estimates or assumptions.
At 9.35 am, shares of ICICI Prudential Life Insurance were quoting Rs 576.5, down 9.3 percent compared to the previous session's closing price.
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Morgan Stanley has given an 'equal-weight' rating on ICICI Prudential Life with a target price of Rs 695 per share. The company missed its Value of New Business (VNB) forecasts in the third quarter, despite reporting stronger Annualized Premium Equivalent (APE) growth compared to peers, driven by a weak base.
Following the margin miss, Morgan Stanley has trimmed its VNB estimates for FY25-27 by 2 percent. Volatility in performance, weaker margin delivery, and lower RoEV compared to peers drive the 'equal-weight' rating, said the brokerage.
Despite 9MFY25 VNB growth of just 8.5 percent YoY, management stays committed to delivering top-line driven absolute VNB growth in mid double-digits over the medium term, said Nuvama Institutional Equities, reiterating its 'add' call. However, the brokerage cut its price target to Rs 720, from Rs 740 earlier.
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