Hold ICICI Prudential Life Insurance Company; target of Rs 438: Prabhudas Lilladher

Prabhudas Lilladher's research report on ICICI Prudential Life Insurance Company

ICICI Pru Life’s delivered a strong uptick in margins to 27.4% in Q2FY21 & 26.3% on H1FY21 basis which was up 295bps QoQ improvement and is up 188bps up from Q1FY21 to H1FY21 basis. Tailwinds on margins have been on healthy mix change towards non-par savings & protection, while re-pricing benefit & opex control also help deliver margins. Protection share is now 19% in APE mix, although it is still lagging to peers with de-growth of 18% YoY in Q2FY21 & 10% YoY in H1FY21. Though margins have been strong, we believe margins will not sustain due to recovery in ULIP post Q4FY21, retraction of some repricing on protection due to competition & non-par savings growth will slow and hence see margins at 25-26% but are higher than 24% estimated earlier.

Outlook

We upgrade to HOLD from Reduce revised TP of Rs438 (from Rs425) based on 1.9x Sep-22 EV & 15x NBP.