ICICI Prudential Life Q4 Review - Growth Dial-Up Continues To Take A Toll On Profitability: HDFC Securities

HDFC Securities Institutional Equities

ICICI Prudential Life Insurance Company Ltd. clocked muted annual premium equivalent growth (+5% YoY) and a 20% YoY VNB de-growth. The steep collapse in VNBM to 24.6% (-738 basis points YoY) was driven by inferior unit economics from ICICI Life’s recalibration of its product design during Q3 FY24, and a ULIP-dominated mix.

ICICI Prudential’s investments in channel diversification helped offset de-growth in the proprietary banca channel (-4% YoY). We believe that ICICI Prudential’s re-engineered business strategy, which prioritises growth over product mix, is likely to continue taking a toll on profitability (VNB margins) and base embedded .

We raise our FY25E APE growth forecasts while moderating our margin assumptions to adjust for the potential drag from changes in product mix and unit economics - as a result, we expect VNB to clock 1% compound annual growth rate over FY23-26E.

We retain Add with a revised target price of Rs 610 (1.6 times March-26E EV).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.