Buy ICICI Pru Life; target of Rs 750: Emkay Global Financial
Emkay Global Financial is bullish on ICICI Pru Life has recommended buy rating on the stock with a target price of Rs 750 in its research report dated July 21, 2021.
July 22, 2021 / 04:00 PM IST
An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.
Emkay Global Financial's report on ICICI Pru Life
We upgrade ICICI Prudential Life Insurance (IPRU) to Buy from Hold, factoring in superior VNB growth (~29.4% yoy) and an improving product mix (protection share at ~22%). Our concerns about margins have subsided as there was a shift in product mix, aided by a diversified distribution mix, which should support the margin profile in the coming quarters. IPRU’s VNB grew ~78% yoy to Rs3.6bn in Q1FY22 while APE grew ~48% yoy to Rs12.2bn. Though the low base from last year has played a role, considering the lockdowns in Q1, this is indeed a robust performance. VNB margins surged to ~29.4% in the quarter from ~23.6% in Q4FY21 and ~24.4% in Q1FY21. Like its peers, IPRU has witnessed a surge in claims and maintains Rs5bn as provisions. ICICI Bank holds a distribution share of 28% and has seen solid demand for singlepremium policies and annuity plans. We remain curious about the difference in approach between two large private insurers [IPRU and HDFC Life] toward group protection, which we believe will unfold in due course.
We are increasing our APE growth estimates by ~31% each for FY23 and FY24 amid the surge in demand for single-premium plans. We expect FY23/24E VNB margins at 26.6%/26.1% vs. ~24.7% earlier. We roll forward to Sep’22E with a revised TP of Rs750 (Rs506 earlier), corresponding to 2.7x P/Sep’23E EV (~2x earlier). Upgrade to Buy.
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