Hold ICICI Prudential Life Insurance; target of Rs 750: KR Choksey

KR Choksey recommended hold rating on ICICI Prudential Life Insurance with a target price of Rs 750 in its research report dated October 24, 2024.

Broker Research

October 25, 2024 / 10:46 IST

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KR Choksey's research report on ICICI Prudential Life Insurance

For Q2FY25, the VNB margin stood at 23.4%, a decline of 458 bps YoY/ 64 bps QoQ). The decline in VNB margin was primarily due to two factors: a) the shift in the underlying product mix towards unit link and the decline in the non-participating business, and b) the impact of macroeconomic factors such as the decline in G-Sec yields. For H1FY25, the company reported a cost to TWRP of 29.4%. This ratio declined from 32.6% in Q1FY25), indicating an improvement in cost efficiency. The cost to TWRP for the savings line of business stood at 17.9% in H1FY25, down from 19.2% in Q1FY25. Total APE stood at INR 25,040 Mn for Q2FY25, reporting a growth of 21.4% YoY/ 27.6% QoQ. This was led by a continued surge of 34.6% YoY in the first-year premium segment. The New Business Premium (NBP) saw a 12.2% YoY growth during the quarter. The single premium segment reported a muted growth of 0.9% YoY. Driven by the strong APE growth, the company gained 1.1% private sector market share on an RWRP (Renewal Weighted Received Premium) basis, reaching 10.3% in H1FY25. The credit life growth in Q2FY25 was subdued, primarily due to a slowdown in the Microfinance Institution (MFI) segment. The company actively seeks to add new financial institution partners to its credit life distribution network to broaden its reach and reduce reliance on any single partner. IPRU has added ten new partners in Q2FY25.

Outlook

We assign a 1.8x P/EV (unchanged) on FY26E EVPS of INR 416.0 to arrive at a Target Price of INR 750 per share (unchanged), indicating a 0.4% upside from the CMP. Accordingly, we maintain our rating of “HOLD” on the shares.

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