Hold ICICI Prudential Life Insurance; target of Rs 455: Emkay Global Financial
Emkay Global Financial recommended hold rating on ICICI Prudential Life Insurance with a target price of Rs 455 in its research report dated July 22, 2020.
July 22, 2020 / 03:19 PM IST
Emkay Global Financial's report on ICICI Prudential Life Insurance
IPRU saw VNB margins surge by 342bps yoy (+60bps qoq) to 24.4% during Q1FY20 amid a change in product mix (rising share of protection plans to 26%). However, the same is attributable to a steep decline in APE by ~44% yoy (against ~30% for HDFCSL). The share of ULIP declined, yet elevated at ~43.6% (~64.7% for FY20). 13M persistency for IPRU dipped significantly to ~81.1% against ~89.2% and 49M stood at ~63.3% against ~68.1% last quarter. This is in spite of relaxation provided by the government over premium payments. Hence, we would await further clarity over the same. The solvency ratio improved on a qoq basis to ~217%. Though we remain appreciative of IPRU management's consistent focus on increasing the share of protection plans, we still remain skeptical of the elevated ULIP portfolio and expect the ULIP share to rise with stability in equity markets as well as due to elevated share of bancassurance (which can comfortably sell ULIPs).
We expect VNB to grow at a CAGR of ~7.7% to Rs20bn over FY20-23E, with a 12% CAGR in EV to Rs3.2bn by FY23E. We introduce FY23E estimates and roll forward to Sept'22E with a revised TP of Rs455 (Rs374 earlier), corresponding to 2.1x P/EV. We maintain our Hold rating and UW stance in Insurance EAP.
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