Buy This Largecap Insurance Stock For Aggressive 30% Upside, VNB Grew 31% YoY: Emkay Global

Brokerage firm Emkay Global suggests buying the stocks of ICICI Prudential Life (IPRU). The firm stated that at 31%, IPRU's Q1FY23 VNB margin came in above our estimates (30.2%), as strong growth and better pricing in Group Protection (Credit Life and GTI), along with annuity growth, drove margin improvement.

Stock To Buy: Target Price, Current Market Price

The Current Market Price (CMP) of ICICI Prudential Life (IPRU) is Rs. 517. Emkay Global has estimated a Target Price for the stock at Rs. 670. This stock has the potential to give 29.60% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 73,930 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 517
Target Price	Rs. 670
Potential 1 year return	29.60%
52 week high share price	Rs. 724.30
52 week low share price	Rs. 430

A material slowdown in Jun'22 monthly new business resulted in a softening of APE growth to 24.7% YoY on a favourable base (Delta wave turbulence). On a 3Y CAGR basis, Q1FY23 APE was largely flat with 1.1% growth. Non-ICICI Bank channels impressed, with 70% YoY growth. Protection APE grew 22% YoY vs. overall APE growth of 25%.

Stock advantages and risks: Emkay Global

"VNB for the quarter grew 31% YoY to Rs. 4.71bn. Profit after tax stood at Rs. 1.56bn, materially lower than our estimates, and also much lower than pre-Covid Q1 PAT trends. This could likely be explained by the much higher new business strain due to growth in annuities and guaranteed non-par savings. The strong volume and pricing growth in GCL and GTI made up for the struggling retail protection that saw a material APE decline to ~Rs. 0.7bn (~5% of APE) despite good sales of the Return of Premium (RoP) variant. Persistency saw good improvement in the 61st month (likely owing to the change in product mix away from ULIP over the years)," Emkay Global commented on the stock's advantages.

However, the performance of the ICICI Bank channel continued to disappoint, with 11% YoY decline in its APE, driving ICICI Bank's APE share to 19.8%, the firm mentioned.

Company profile: ICICI Prudential Life

ICICI Prudential Life Insurance Company Limited (ICICI Prudential Life) is promoted by ICICI Bank Limited and Prudential Corporation Holdings Limited. ICICI Prudential Life began its operations in the fiscal year 2001. Their Assets Under Management (AUM) at March 31, 2022 were Rs. 2,404.92 billion. In FY 2015 ICICI Prudential Life became the first private life insurer to attain assets under management of 1 trillion. It is also the first insurance company in India to be listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Management is confident of a growth pick-up in the coming months with all the distribution channels, ex-ICICI Bank, firing up and the demand for retail protection picking up in H2FY23. Management expects this growth, coupled with higher-than-FY22 VNB margins, to drive it to its 2x FY19 VNB goal.

Disclaimer

The above stock was picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.