ICICI Securities has released a research report recommending the purchase of ICICI Prudential Life Insurance Company (IPRU) with a target price of Rs 750. The recommendation is based on IPRU’s successful acceleration of volume growth, with a 5% and 15% growth in total Annual Premium Equivalent (APE) for FY24 and FY25, respectively. The company’s retail Weighted Received Premium (WRP) grew by 22.3% compared to the private industry’s 17.4% growth in 11MFY25.
The report highlights that IPRU’s margin performance has been subdued due to changes in product mix, with the Value of New Business (VNB) margin declining to 22.7% and 22.8% in Q4FY25 and FY25, respectively, from 24.6% in FY24. However, the implementation of higher surrender charges and a high ULIP mix are expected to improve VNB growth, which stood at 6.4% YoY in FY25.
ICICI Securities notes that IPRU’s diversified channel mix, comprising agency, direct, banca, partnership distribution, and group APE, mitigates business risks. The mix stood at 29%, 14%, 29%, 11%, and 16%, respectively, as of FY25. Despite strong volume growth, VNB growth was limited to 6.4% in FY25 due to weaker margins. The BUY rating is based on potential EV growth until FY27E, balancing volume and stable margin outlook, while the valuation remains modest.
For more detailed recommendations, investors are advised to check the full report. It’s worth noting that the views expressed in the report are those of the analysts and not of the website or its management. Investors are recommended to consult certified experts before making investment decisions.
