EUR 120.00 For Business Accounts Only

MOSL: ICICI PRUDENTIAL LIFE INSURANCE (Buy)-Successful transformation to a more balanced player

(IPRU IN, Mkt Cap USD9.1b, CMP INR497, TP INR630, 27% Upside, Buy) 

Protection & non-par savings remain focus segments; reiterates VNB doubling guidance

• ICICI Prudential Life’s (IPRU) Annual Report reaffirms the company’s focus on steadily diversifying its product mix, especially, the non-par savings & protection segment.
• The addition of new-age partners and a wider presence across traditional channels will boost its business growth. The share of banca channel (excluding ICICI Bank) has increased to 14% in FY22 from 5% in FY18. These initiatives will provide the company with diversification benefits and drive an optimal business mix, thereby supporting margins.
• IPRU reiterated its guidance to double FY19 Value of New Business (VNB) by FY23 led by its 4P strategy.
• IPRU has reported 34% YoY growth in individual WRP in FY23 YTD and we estimate ~21% CAGR in new business APE and 23% CAGR in VNB over FY22-24E. We reiterate our Buy rating with a revised PT of INR630 (2.1x FY24E EV).

On track to achieve guidance of doubling FY19 VNB by FY23E

• IPRU remains on-course to double FY19 VNB by FY23. It continues to execute its 4P strategy of Protection focus, Premium growth, Persistency improvement, and Productivity enhancement. Wider product offerings, newer channels of distribution and superior customer service are key enablers of this strategy. VNB margins have improved sharply over the years and are likely to remain resilient, aided by further improvement in the company’s product mix. We estimate VNB growth to be mainly driven by premium growth rather than margin enhancement, going forward.