Hold ICICI Pru Life; target of Rs 610: Emkay Global Financial

Emkay Global Financial's research report on ICICI Pru Life

IPRU reported relatively weaker performance in H1FY24, wherein the negative surprise on VNB margin (28.8% vs Emkay: 30%) added to the challenge of the persistent weak growth (0.1% YoY vs Emkay: 2.6% YoY). Although the correct measures are being undertaken by Management for resurrecting top-line growth, these will take time to bear fruit; however, any positive outcome will be preceded by surge in costs. Additionally, we foresee some growth challenges emerging in the non-ICICIB banca channel, beset by a higher base and addition of new life insurers.

Outlook

Overall, we see the growth & margin concerns sticking (except in Q3FY24, when the lower base would be favorable for growth). Accounting for such developments, we cut our FY24-26E APE by ~5% and VNB by ~7%; we downgrade the stock to HOLD from Buy, with revised Sep-24E TP of Rs 610/share (implied FY25 P/EV: 1.8x).