Reduce ICICI Prudential Life; target of Rs 445: HDFC Securities

HDFC Securities' research report on ICICI Prudential Life

We like IPRU’s re-engineered business model, which is focused on a more diversified product mix (increasing PAR + NPAR) along with an increased protection share. We, however, remain wary of the current COVID-19 situation and believe that outlook for FY21E remains challenged and build in a 16.3% decline in FY21E VNB; post which we expect VNB to grow at FY21E23E CAGR of 18.5%. In our opinion, a difficult FY21E is most likely to delay achieving the goal of doubling VNB by FY23E.

Outlook

We downgrade our rating on IPRU to REDUCE with a DCF-derived target price of Rs 445 (Mar-21E EV + 23.6x Mar-22E VNB). The stock is currently trading at FY21/22E P/EV of 2.5/2.2x and P/VNB of 30.2/23.3x. Key risks are lower-than-expected growth, protection share or higher mortality as a result of the pandemic.

ICICI Prudential Life Insurance 21072020-hdfc

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