Buy ICICI Prudential Life Insurance; target of Rs 600: Motilal Oswal

Motilal Oswal's research report on ICICI Prudential Life Insurance

ICICI Prudential Life Insurance (IPRU) posted a flattish new business APE (1% YoY growth) in 2QFY23 as strong growth in group protection and non-linked savings was offset by weak performance in ULIPs and group savings. However, APE grew 10% YoY in 1HFY23 to INR35b. VNB grew 21% YoY to INR6.2b (8% beat), primarily driven by a 502bp YoY expansion in VNB margin to 31.1% in 2QFY23. For 1HFY23, VNB rose 25% YoY to INR10.9b; VNB margin also expanded 372bp to 31.0%. We marginally cut our APE estimates for FY23/24 but estimate IPRU to deliver 23% CAGR in VNB over FY22-24. This will be driven by a combination of premium growth and slight improvement in margins, thereby enabling operating RoEV at ~17% in FY24E.

Outlook

Maintain BUY with a revised TP of INR600 (premised on 2x FY24E EV).

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