The brokerage believes that ICICI Prudential's re-engineered business strategy, which prioritises headline growth over product mix, will drive the growth trajectory of the VNB with muted expansion in VNB/APE margins going forward.
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HDFC Securities Institutional Equities
ICICI Prudential Life - Margin continues to tumble further
ICICI Prudential Life Insurance Ltd. clocked strong annual premium equivalent growth (+27% YoY) slightly above our estimates, while the value of new business growth was modest (+9% YoY) and below our estimates for 9M FY25. The VNB margins further witnessed steep collapse to 22.8% (-390bps YoY) on the back of a ULIP-heavy mix.
We believe that ICICI Prudential's re-engineered business strategy, which prioritises headline growth over product mix, will drive the growth trajectory of the VNB with muted expansion in VNB/APE margins going forward.
We maintain our FY25E/FY26E APE growth forecasts (~25%/18%), however due to inferior product mix reduce our FY25E/FY26E VNB margins to 23.0%/23.2%. We expect APE/VNB to clock 19%/17% CAGR over FY24-27E and retain our Add rating with a reduced target price of Rs 735 (1.8x Sept-26E embedded value).
Oberoi Realty -Muted presales a dampener; strong BD a key trigger
Oberoi Realty Ltd. registered presales of Rs 19.2 billion (+144%/+33% YoY/QoQ); it was largely backed by sales from its new launch Jardin, which accounted for 70% of total sales, followed by Elysian and 360W. A weak print was largely due to delays in finalization/closure of deal for its uber-luxury project 360W where Oberoi Realty managed to sell 2 units (versus 6/1units in Q2 FY25/Q3 FY24; 9MFY25 :14 units).
However, we believe that the company will likely be able to sell its inventory over the next 24-30 months. The average price realization was at Rs 29.5k psf (-2%/-45% YoY/QoQ), largely due to lower ticket size sales coming from Jardin. Additionally, Oberoi Realty is likely to push its launch of the final phase of its Borivali project to Q1 FY26 (versus Q4 FY25 earlier). Borivali Mall is expected to start its operation by Feb-25, with a leasing occupancy of >80%. Moreover, Oberoi Realty has secured 81acres of land in Alibaug through a joint development agreement.
The project is planned to feature a blend of high-end luxury offerings, including a 0.3 msf hotel and 1.3 msf of villa developments. Regarding recent business development in Tardeo, Gurgaon, and Adarsh Nagar, Oberoi Realty plans to launch these projects by Q2 FY26/Q3 FY26. Given the expected robust cash flows from ready-to-move-in inventory in 360W and fundraise of Rs 60 billion, we remain constructive on Oberoi Realty and maintain Buy, with NAV-based target price to Rs 2,302/share.
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