Buy ICICI Prudential Life Insurance; target of Rs 450: Motilal Oswal

Motilal Oswal 's research report on ICICI Prudential Life Insurance

IPRU’s PAT fell 29% YoY to INR3b (our estimate: INR3.3b) in 2QFY19. Despite renewal/single premium increasing 18%/50% YoY, gross premium growth was restricted to 16% YoY due to tepid 3% YoY growth in first year premium. NBM improved to 17.5% in 1HFY19 from 16.5% in FY18, enabling 41.5% VNB growth for the first half of the fiscal. Trend in persistency improved across cohorts, while 13th month persistency held largely stable at 85.2%. This enabled healthy 18% YoY growth in renewal premium in 2QFY19.

Outlook

We revise our PAT estimates to reflect higher opex, and value IPRU at INR450 per share (2.5x FY20E EV). Maintain Buy.