Buy ICICI Prudential Life Insurance Company; target of Rs 640: Religare Retail Research

Religare Retail Research report on ICICI Prudential Life Insurance Company

ICICI Prudential reported Q2FY24 net premium income growth of 4.6% YoY to Rs 10,022 Cr which was led by single premium which grew by 7% YoY to Rs 3,005 Cr. Annualized Premium Equivalent (APE) increased by 3% YoY to Rs 2,063 Cr remaining slightly below consensus. Net commission during the quarter increased by 87% YoY to Rs 771 Cr due to the regulatory norms leading to increase in overall cost ratio to 26.2% from 21.6% in Q2FY23. Owing to the increased costs, shareholder’s account surplus/ (deficit) saw a de-growth of 42% YoY to Rs 301 Cr.

Outlook

However, on the margin front cautiousness continues as it saw a dip during the quarter. On financial front, we expect APE/NBP/VNB to grow at 19% each CAGR over FY23-25E but margin growth slightly revised downwards to 32% for FY25E. Thus, maintaining a Buy rating our target price is revised slightly lower to Rs 640 valuing the company at 1.8x of its FY25E embedded value (EV) per share.