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Last Updated : Apr 25, 2019 10:02 AM IST | Source: Moneycontrol.com

ICICI Prudential rises post Q4 results; CLSA raises target price to Rs 475

The uptick in premium growth & rebound in persistency ratio, as well as attractive valuation, compared to its peer HDFC Life, make analysts bullish on the stock.

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Shares of ICICI Prudential rose about 2 percent on April 25 morning even though it reported a 23 percent decline in consolidated net profit at Rs 261.02 crore for the January-March quarter of 2018-19, but total income doubled in the same period.

The uptick in premium growth & rebound in persistency ratio, as well as attractive valuation, compared to its peer HDFC Life, make analysts bullish on the stock.

The ICICI Bank's subsidiary had reported a net profit of Rs 340.26 crore in the same quarter of the previous fiscal.

However, total income in the said quarter on a consolidated basis more than doubled to Rs 16,053.89 crore from Rs 7,136.87 crore in the year-ago period, ICICI Prudential Life said in a regulatory filing.

The total premium registered a growth of 14.3 percent from Rs 27,069 crore to Rs 30,930 crore in 2018-19.

With regard to the value of the new business (VNB), it said, the margin increased to 17 percent from 16.5 percent in the previous fiscal. The absolute VNB for 2018-19 was Rs 1,328 crore.

VNB is used to measure the profitability of the new business written in a period. It is the present value of all future profits to shareholders measured at the time of writing of the new business contract.

CLSA maintained its buy rating on ICICI Prudential Life Insurance post March quarter results but raised its target price to Rs 475 from Rs 450 earlier.

For FY19, VNB growth lagged by about 3 percent on a YoY basis due to weak premium growth and flattish margin. The key positives were an uptick in premium growth and rebound in the persistency ratio.

Over FY19-21, CLSA sees a 24 percent VNB CAGR aided by a rise in annualized premium equivalent (APE). Additionally, over FY19-21, the global investment bank sees a 250 bps expansion in its margin towards 20 percent.

The lower dividend payout will support EV growth, and valuation is at a 40 percent discount to HDFC Life which increases the scope for a re-rating.

(With inputs from PTI)

Disclaimer: Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Apr 25, 2019 10:02 am
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