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Target: ₹700
CMP: ₹522.90
ICICI Prudential Life (IPRU) reported slower-than-industry APE growth (+1 per cent 3-year CAGR, in line with estimates); however, VNB margins, at 31 per cent, came in 200bps ahead of estimates, translating into a 32 per cent y-o-y VNB growth.
We like IPRU’s reengineered business model, which is focused on a more diversified product and channel mix, industry-leading share in sum assured (1QFY23: 15.8 per cent), and rising share of traditional products.
Management highlighted that the demand for term protection has been soft after normalisation in COVID cases, and it expects it to pick up from H2-FY23 onwards.
We expect the re-jigging of protection products to customer demand alongside strong momentum from non-ICICI Bank channel to aid future growth. We expect VNB to clock an 18 per cent CAGR over FY22-24.
We retain our Add rating with a target price of ₹700; however, we lower our target P/EV multiple to 2.4x from 2.6x as we roll forward to Mar-2024. The stock is currently trading at FY23/24 P/EV of 2.0/1.8x and P/VNB of 15.9/12.6x.
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