Motilal Oswal's research report on ICICI Prudential Life Insurance
ICICI Prudential Life Insurance (IPRU) reported a slight decline of 3% YoY in new business APE to INR35b (in line) in 4QFY25. For FY25, APE grew 15% YoY to INR104.1b. VNB margin for the quarter stood at 22.7% vs. our estimate of 21.9% (21.5% in 4QFY24). Absolute VNB grew 2% YoY to INR 8b (in line). For FY25, VNB was at INR23.7b (+6%) and margin stood at 22.8% vs. 24.6% in FY24. For 4QFY25, IPRU reported a 122% YoY jump in shareholder PAT to INR3.9b (32% beat). For FY25, PAT grew 39% YoY to INR11.9b. Management aims to achieve higher VNB growth compared to APE growth, driven by 1) improvement in protection segment margin by repricing group term products, and 2) sustaining higher margins in ULIPs through rider attachments and higher sum insured. While there is no specific APE growth guidance, the aim is to grow higher than estimated industry growth of 15% in FY26.
Outlook
We trim our APE growth estimates for FY26 from 18% to 14% while retaining FY27E growth at 16%. For VNB margins, we build in about 70bp/50bp expansion in FY26/FY27 to 23.5%/24% due to better ULIP and protection margins. Reiterate BUY with a TP of INR680 (based on 1.6x FY27E EV).
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