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Yes Securities Report
There are reasons galore exerting downward pressure on value of new business margin:
There has been a shift in product mix towards low-margin unit linked insurance plan due to strong equity markets. There has also been a shift towards par from non-par, especially for ticket sizes above Rs 0.5 million.
There has also been a decline in group term product annual premium equivalent due to lower deal sizes. Furthermore, competitive pressure has led to lower pricing on non-ar and annuity products.
There has also been a decline in pricing for group term products. Lastly, there has also been an increase in new business commission across products after redesign of commission structure
We maintain a less-than-bullish ‘Add' rating on ICICI Prudential with a revised price target of Rs 575:
We value ICICI Prudential at 1.8 times FY25 price/embedded value for an FY24E/25E/26E return on EV profile of 15.0%/15.1%/15.2%.
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