Motilal Oswal is bullish on ICICI Prudential Life Insurance has recommended buy rating on the stock with a target price of Rs 780 in its research report dated October 20, 2021.
Broker Research
October 20, 2021 / 12:41 PM IST
IPRU posted ~35% YoY growth in new business APE, led by healthy trends in the Annuity segment (~67% YoY), while ULIP growth bounced back strongly (~44% YoY). Protection growth was aided by Credit Life/Group Term, while Retail Protection growth stood weak. On the distribution side, growth was supported across all channels (barring ICICIBC). IPRU continued to improve its distribution mix by adding new partners and agents. VNB grew ~28% YoY to INR5.2b (~7% miss). VNB margin moderated by 130bp YoY to 26%, affected by slower growth in Protection sales. Shareholders’ PAT grew strongly (~47% YoY), aided by moderation in COVID-19 claims. Persistency improved in the 13th month, but was stable in the 61st month.
Net premium income was muted ~8% YoY, affected by a decline of ~4% in renewal premium. However, new business premium growth was robust (~34% YoY), led by Regular/Single premium, with both growing ~33%/34% YoY. Growth in shareholders’ PAT stood strong ~47% YoY. Total APE growth was robust ~35% YoY, led by a strong recovery in ULIP at ~44% YoY, Annuity (~67% YoY), and Non-Linked Savings (~31% YoY). Protection growth stood ~21% YoY, led by Credit Life/Group Term, while Retail Protection stood muted. The share of Protection declined to 14.2% (v/s 16.2% in FY21). Among other segments, the share of Annuity/ULIP rose to ~4%/~51% (v/s 3.5%/47.8% in FY21). IPRU is seeing continued momentum in business growth, led by Non-Linked, Annuity, and Group Protection over the medium term. Inquiries for Retail Protection are increasing, and IPRU expects growth to improve in the coming months.
Outlook
IPRU has maintained strong traction in premium growth, led by a recovery in ULIP, while healthy momentum continues in the Non-Linked and Annuity segment, backed by a strengthened distribution. The share of banca (excluding ICICIBC) rose to ~11% v/s 5.1% in FY20. The increase in agent recruitment and adding of new ecommerce players will continue to support premium growth. VNB growth moderated in 2QFY22 affected by weak Protection trends. We expect VNB margin to remain stable as growth trends remain steady and Protection growth recovers. We estimate IPRU to deliver ~29%/32% CAGR in new business APE/VNB growth over FY21-24E, led by improving margin (29% by FY24E), thus enabling an improvement in operating RoEV to ~17%. We maintain our Buy rating with an unchanged TP of INR780/share (2.7x 1HFY24E EV).
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