Buy ICICI Prudential Life; target of Rs 564: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on ICICI Prudential

GWP has grown by 21% yoy and 35% qoq to Rs. 65,993.9 mn while net premium earned has grown at 20.6% yoy and 35.7% qoq. Overall, APE growth was strong at 16.8% yoy with savings growing 37% yoy (during H1FY18) and protection growing at 31.6% yoy.   Commission expense came in at Rs. 3623mn, registering growth of 98.6% yoy and 68% qoq. With a 9.4% decline in operating expense of 9.4%, total expense ratio increased to 13% against 12.9% for Q1FY18 but low than 13.3% for Q2FY17. High growth in commission expense has been on account of change in product mix while decrease in opex is on account of lower sales and marketing expense during the period. Surplus for the quarter was Rs. 3554 mn, up 12.5% yoy but down 10.4% qoq. Surplus growth on yoy basis has been aided by strong growth and cost efficiency.  VNB margin stands improved at 11.7% versus 9.4% for H1FY17 and 10.1% for FY17.  PAT for the quarter was Rs. 4212 mn, flat yoy and up 3.8% qoq.   Owing to its customer retention efforts, 13th month persistency improved to 84.70% against 78.60% for Q2FY17.  Solvency position continues to be strong at 275.7%.

Outlook
We estimate the company to deliver RoEV of 18.3% for FY20E  on the back of VNB margin improving to 16%. We thus value ICICIPru at ~Rs. 8,10,059 million which is Rs. 564/share, offering an upside of 45% at CMP of Rs. 388/share. The company is currently valued at 2.0x FY20E EV (3.4x FY17 EV).
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