Buy ICICI Prudential Life Insurance; target of Rs 569: Dolat Capital
Dolat Capital is bullish on ICICI Prudential Life Insurance has recommended buy rating on the stock with a target price of Rs 569 in its research report dated July 22, 2020.
July 23, 2020 / 07:13 PM IST
Dolat Capital's research report on ICICI Prudential Life Insurance
IPRU reported better than expected APE at Rs. 8.2bn (-44% YoY) with protection APE in-line with estimates at Rs. 2.1bn, flat on a YoY basis. Within the Protection business, Credit Protect APE declined ~72% on account of muted credit growth and lower disbursements whereas the retail protection business saw a substantial increase. ULIP continues to face headwinds both in growth and persistency declining ~67% APE YoY driven by market outlook. Overall 13th month persistency (ex-single premium) declined 1.4% sequentially and is currently below the VNB assumption of 82.5%. IRDA’s moratorium on premium payment makes this number looker weaker. Product mix changed significantly towards more profitable segments of protection and non-linked savings with ULIP mix declining 44% overall vs 71% in Q1FY20. Mix change was the main driver for VNB margin expansion of 3.4% YoY / 0.6% QoQ to 24.4%, however, this was lower than expected as the inability to pass on reinsurance price hike in the quarter led to suboptimal protection margins. Despite a weaker performance in growth relative to peers, we expect IPRU to continue to deliver in the individual protection segment where it is heavily backed by ICICI bank and a strong agency channel.
We initiate on IPRU with a BUY at a target price of Rs. 569 implying a FY21 P/EV of 3.2x and RoEV of 13%.
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