Buy ICICI Prudential Life Insurance; target of Rs 890: ICICI Securities

ICICI Securities research report on ICICI Prudential Life Insurance

IPRU held an analyst meet to outline its granular strategy that has helped it deliver industry-beating growth in the past few months and will be key to maintaining the growth momentum in the medium term. The company has reiterated its target to grow at a faster rate than the industry in a profitable manner. From Oct’24, new surrender charges will be implemented and the company is getting its products ready to sell in the new environment. With non-linked share at just 17%, the impact would be limited and offset by altering commission structures (mix of trail-based commissions or clawback clause). IPRU believes that ULIP, despite being margin-dilutive, offers reasonable returns for limited risks to the balance sheet. Annuity and protection have large growth opportunities.

Outlook

We estimate IPRU to deliver a 21% CAGR in VNB over FY24-26E. VNB growth will be fueled by premium growth and a slight improvement in margins, thereby enabling an operating RoEV of ~20% over FY26E. We reiterate our BUY rating with a TP of INR890 (based on 2.1x Mar’26E EV).

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