ICICI Securities research report on ICICI Prudential Life Insurance Company
ICICI Prudential (IPRU) has successfully accelerated volume growth (5%/15% growth in total APE FY24/FY25; 22.3% growth in retail WRP vs 17.4% growth for the private industry in 11MFY25) backed by well-executed distribution/product initiatives. Margin performance has been muted (VNB margin down to 22.7%/22.8% in Q4FY25/FY25, from 24.6% in FY24) driven primarily by product mix change. As margin bottoms out with high ULIP mix and implementation of higher surrender charges, VNB growth ahead improve (6.4% YoY in FY25). The diversified channel mix (agency/direct/banca/partnership distribution/group APE mix is 29%/14%/29%/11%/16%, as of FY25) is unique among peers and significantly blunts the risks to the business. Yet, IPRU’s ability to improve margins shall be tested, considering open architecture and increase in linked products mix.
Outlook
However, despite strong volume growth, VNB growth stood at 6.4% in FY25 due to weaker margins. Our BUY rating captures possible EV growth till FY27E – balanced between volume and stable margin outlook while valuation remains modest.
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