ICICI Prudential Life Insurance Company reported a decline in its share price on Wednesday following the release of its Q4 results. The company’s stock price plunged by over 6% in early trade on the BSE, reaching a low of 553.15 per share. This significant drop was primarily attributed to the company’s weak financial performance during the quarter.
ICICI Prudential reported a net profit of 174 crore for the fourth quarter of FY24, marking a sharp decrease of 26% compared to the 235 crore net profit recorded in the corresponding period of the previous year. The company’s net premium income witnessed a rise of 17%, increasing from 12,629 crore to 14,788 crore year-over-year (YoY). However, the Value of New Business (VNB) declined by 26.5% to 776 crore, and the VNB margin fell from 32% to 21.5%. This decline was primarily driven by a persistent decrease in demand for high-value policies and a shift in customer preference towards low-margin products. Despite these challenges, the annual premium equivalent (APE) grew by 9.5%, rising from 3,300 crore to 3,615 crore YoY.
Following the release of ICICI Prudential’s Q4 results, which fell short of expectations, some brokerages have revised their earnings estimates for the company. Here’s an overview of their perspectives:
–
Motilal Oswal:
The brokerage firm lowered its estimates for APE and VNB margin for FY25 and FY26 in light of ICICI Prudential’s Q4 results. It anticipates an 18% CAGR in VNB over FY24-26. Motilal Oswal emphasized concerns about lower product-level margins in the medium term but highlighted the importance of premium growth for valuation re-rating. The firm maintained its ‘Buy’ rating and set a target price of 700 per share for ICICI Prudential.–
Kotak Institutional Equities:
The brokerage believes that ICICI Prudential Life is gradually regaining its growth trajectory, supported by strong proprietary channels and a stable business from its parent company. However, higher payouts in multi-insurer shops continue to exert pressure on margins. Kotak Equities anticipates a gradual improvement in the APE trajectory, while margins may remain rangebound, closer to current lows. It revised down its VNB estimates by ~2% to reflect lower margins, but its EV forecasts increased by 3-4%, reflecting higher investment variance and unwinding rates. The brokerage expects the company to deliver mid-teen growth (similar to the industry) with flat margins. It reiterated its ‘Buy’ call on ICICI Prudential shares with a target price of 685 apiece.–
JM Financial:
While the company is committed to investing in its channels, JM Financial sees the potential for margin expansion by 2HFY25, primarily driven by a product mix shift away from ULIPs and normalization of operating expenses at current levels. It maintained FY25e/FY26e VNB estimates at 27.4 billion and 33.6 billion. With limited support from the ICICI Bank channel, JM Financial anticipates ICICI Prudential stock trading at a discount to other bank-led life insurers. The firm reiterated its ‘Buy’ call with an ICICI Prudential share price target of 736 apiece.At the time of writing, ICICI Prudential shares were trading 2.82% lower at 576.40 apiece on the BSE.
