Buy This Large Cap Insurance Sector Stock, Shares Likely To Jump In 2023, Says Nuvama Wealth Direct

Nuvama Wealth Direct in its pick of the week report has assigned a buy on the stock of ICICI Prudential Life Insurance Company Limited (IPru Life) with a target price of Rs. 525 apiece. According to the given target price, the stock is likely to surge up to 11% from its current market price. ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank Ltd., India's largest private sector bank, and Prudential. It is a large cap Life Insurance company with a market capitalisation of Rs 67,992.98 crore.

Stock Overview and Returns

The stock on the NSE, last traded at Rs 473 apiece, gaining 0.28% compared to its previous close of Rs 471.70 apiece. The stock touched its 52-week high level on 18 January 2022 at Rs. 648.85 apiece, and its 52-week low level on 8 March 2022 at Rs. 430 apiece, respectively.

The stock surged in a week, giving 4.81% positive returns, whereas in the past 3 months sit fell by 9.33%. The stock has fallen further 17.75% in the past 1 year and 0.53% in the past 3 years, respectively. It has given maximum 20.01% positive return in the past 5 years. 

Business Overview

ICICI Prudential Life is consistently rated as one of the top players in India's life insurance sector on the basis of APE as well as NBP. It was set up in FY01 as a joint venture between ICICI Bank and Prudential Corporation Holdings. It offers long-term savings (linked, participating and non-participating) and protection products (individual life, credit cover and group life) to meet different life stage requirements of customers. The company was also the first insurance player in India to be listed on NSE and BSE in FY17. 

Key highlights

• Company is focusing on reviving the retail protection segment, which is a high-margin segment. The Management is confident of outperforming the industry in terms of VNB growth over the medium term. 
• Management has guided for doubling FY19 VNB by FY23E & they are on track to achieve it led by volume growth. 
• IPru Life is focused on diversifying its distribution channels & adding new partners. The deepening in non-ICICI Bank banca channel has been much stronger. The company expects momentum in the nonICICI bank channel will continue. 
• VNB margin has improved to 31.1% in Q2FY23 from 26% in Q2FY22 on account of operational improvements (persistency) as well as product mix shift in favor of pure protection and non-par savings. 

Risks

• Regulatory changes 
• Protracted weakness in capital markets 
• Rise in competitive intensity 

Disclaimer

The stock has been picked from the brokerage report of Nuvama Wealth Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.