ICICI Prudential Share Price Falls To Six-Month-Low As Brokerages Cut Target Price

Shares of ICICI Prudential Life Insurance Co. fell nearly 10% to hit six-month-low after brokerages raised concerns about the impact on margins and cut target price following its third quarter results.

Citigroup, Goldman Sachs, and Macquarie have all reduced the target price while maintaining a 'neutral' rating. Citigroup has downgraded its forecast, attributing a decline in the Value of New Business margin to a shift in product mix. The brokerage has cut the target price to Rs 720 per share from the earlier Rs 760 apiece.

In the third quarter of this fiscal, the VNB margin stood at 21.2%, falling short of both Citigroup’s estimate of 22% and consensus expectations of 22.4%. The margin reduction was largely due to a higher proportion of low-margin group savings business, the brokerage said. Additionally, back-of-the-envelope calculations point to either significant compression in group savings margins or a slight shift in product-level margins.

Goldman Sachs also reduced its target price to Rs 650 from Rs 665. Its report highlighted that while the third-quarter performance was in line with expectations, growth in Annual Premium Equivalent was driven primarily by unit linked insurance plans, resulting in a margin decline. This shift in business mix towards lower-margin ULIPs and group funds has been a key concern, indicating a potential slowdown in future margin growth.

Macquarie shares a similar 'neutral' view, with a target price of Rs 725. The firm noted that the company’s VNB growth has been disappointing, citing the growing contribution of ULIPs, declining savings, and rising costs. Macquarie sees downside risks to FY25 VNB estimates, further emphasising concerns around profitability and growth sustainability.

Share price of ICICI Prudential Life Insurance fell as much as 10% to Rs 572 apiece, the lowest level since June 10. It pared losses to trade 8.11% lower at Rs 584 apiece, as of 10:57 a.m. This compares to a 0.30% advance in the NSE Nifty 50.

The stock has risen 21.81% in the last 12 months. Total traded volume so far in the day stood at 33 times its 30-day average. The relative strength index was at 25.

Out of 35 analysts tracking the company, 20 maintain a 'buy' rating, 14 recommend a 'hold' and one suggests 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 28.3%.