Buy ICICI Prudential Life Insurance; target of Rs 635: KR Choksey

KR Choksey's research report on ICICI Prudential Life Insurance

In Q3FY23, the Gross Written Premium (GWP) grew 4.7% YoY, while declining by 1.2% QoQ at INR 97,805 Mn. The VNB for Q3FY23 grew by 20.0% YoY, while it was flat sequentially at INR 6,180 Mn, led by strong expansion in VNB margins. The VNB margin for Q3FY23 stood at 33.9%, up from 26.7% for Q3FY22. This was on account of a shift in the underlying product mix. The solvency ratio as of December 31, 2022, was 212% against the regulatory requirement of 150%. The total assets under management of the company were INR 2,519 bn as of December 31, 2022, a growth of 6.0% over INR 2,376 Bn as of December 31, 2021.

Outlook

We assign a 2.0x (earlier 2.3x P/EV of FY24E) P/EV on FY25E EVPS of INR 318.1 and a VNB multiple of 14.7x to arrive at a weighted average Target Price of INR 635 per share (earlier INR 680) (50:50 weights on the P/EV and appraisal value methodology); indicating a 30.3% upside from the CMP. Accordingly, we re-iterate our “BUY” rating on the shares of ICICI Prudential Life Insurance Ltd.

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