Brokerage firm Motilal Oswal Institutional Equities has placed a "buy" call on the stock of ICICI Prudential Life Insurance. The firm sees an upside potential of 15 per cent on the stock, with a price target of Rs 510.
"IPRU Life's (IPRU) business trends were weak due to the COVID-19 led lockdown and subdued buyer sentiment toward capital market linked insurance and investment products. APE growth declined 44% YoY led by 66% YoY drop in ULIPs while other segments maintained steady trends. Persistency declined further with 13th/25th month persistency dropping 140bp/170bp QoQ. However, it is recovering and is above the assumptions incorporated in EV calculations," the firm has said in its report.
According to the reort 1QFY21 VNB of ICICI Prudential Life Insurance declined 35% YoY; however, management has reiterated its intention to double FY19 VNB guidance over the next 3-4 years. VNB margins improved to 24.4%, led by sharp increase in Protection mix of 26% (v/s 15% in FY20).
"We expect continued buoyancy in the Protection business along with gradual recovery in ULIPs to drive business /VNB growth over the near term while persistency should move in a narrow range. Maintain Buy with revised PT of INR510," Motilal Oswal Institutional Equities said in its report.
ICICI Prudential Life was last seen trading at Rs 448 on the NSE.