INSUBCONTINENT EXCLUSIVE:
SBICAP Securities has a buy call on ICICI Prudential Life Insurance Company with a target price of Rs 450.
The current market price of ICICI
Prudential Life Insurance Company is Rs 298.6
Time period given by the brokerage is one year when ICICI Prudential Life Insurance Company price can reach the defined target.
Investment
On YTD basis (10MFY19), RWRP decline moderated to 8.9 per cent YoY vs
10.8 per cent YoY fall in 9MFY19
Due to the increased focus on selling monthly premium paying products, APE growth is significantly better than RWRP
4.2 per cent YoY in 9MFY19
of internal and external factors
Given its high-ticket ULIP-heavy product mix, largely focused on affluent and HNI customers, the volatile market impacted IPRU severely and
the increased thrust from the management to reduce surrenders (rightly so) by sensitizing distributors also had a negative impact on new
The company has taken a number of initiatives, including increased focus on the mass affluent segment, offering a monthly premium paying
product, and intensified sales and marketing
Some early signs of recovery are visible and we expect APE growth to bottom out and return to nearly 15 per cent levels in the next 2
quarters.
Current valuation undemanding, ignoring franchise strength - reiterate BUY: The IPRU share is currently trading at FY20e P/EV of
1.7x for Operating RoEV of nearly 17 per cent in FY20e
The current valuation implies an implied FY21 VNB multiple of nearly 9x, which looks unfair for a strong franchise like IPRU with strong
growth outlook over the medium term
The current valuation seems to be pricing in worst of the growth outlook and ignoring the improvement in profitability and a likely revival
We reiterate our BUY rating with a unchanged target price of Rs 450 (implying FY20e P/EV: 2.7x).
