ICICI Prudential surges 11% after strong Q4 performance
- ICICI Prudential has said its good showing is an outcome of the growth in new business, strong persistency and robust fund management
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Mumbai: Shares of ICICI Prudential Life Insurance Company (ICICI Pru) gained as much as 11% on Tuesday on BSE after the company posted a 23% year-on-year (y-o-y) growth in new business premium during the January-March quarter.
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At 12.05 pm, ICICI Pru was trading at Rs499.25, up 10.39% from its previous close, while the benchmark index, Sensex, gained 0.22% to 48,052.70.
New business annualized premium equivalent (APE) grew 27% y-o-y in March 2021 quarter to Rs2,509 crore from Rs1,974 crore for the same quarter last year. Embedded Value rose 29% to Rs29,106 crore for the quarter ended 31 March 2021 compared with Rs23,030 crore for the corresponding quarter of the previous fiscal. This is an outcome of the growth in new business, strong persistency and robust fund management, ICICI Pru said in a press release.
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Analysts at Motilal Oswal Securities said ICICI Pru would deliver around 25% CAGR in value of new business (VNB) over FY21-23 estimates, led by robust premium growth, and buoyed by new partnerships and product segments, enabling operating return on embedded value (RoEV) of around 15% over FY21-23 estimates.
“Annuity/non-linked savings segments are likely to see healthy growth and should help drive premium growth. We expect the unit linked insurance plan (ULIP) business to revive gradually owing to a benign base and the addition of new banca partners. Persistency trends have improved across cohorts/products. We expect a further recovery in coming quarters as the mix of protection/non-linked savings continues to improve, both of which have a higher persistency rate," the brokerage said in the results update.
The VNB for the quarter grew by 26% y-o-y to Rs591 crore. VNB margin moderated to 23.6% in Q4 (25.1% in FY21), led primarily by growth in non-linked business and increase in protection mix.
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Yes Securities in a note to clients said, "ICICI Pru is embarking on an aggressive target of a 28% CAGR in VNB Margins during FY21-23E. Thus, raising value of new business estimates for FY22 estimates and FY23 estimates by 8% and 10% respectively. A delivery on their aspirational target of 28% compound annual growth rate (CAGR) can call for a re-rating, which we have not built in our target price yet." The brokerage retains its buy rating on the stock.
Assets under management (AUM) stood at Rs2.14 trillion as of 31 March 2021, a growth of 40% over Rs1.53 trillion as of 31 March 2020. It has a debt-equity mix of 55:45 at 31 March 2021. 96.8% of the debt investments are in AAA rated securities and government bonds.
Brokerage firm Emkay Global Financial Services believes that overall insurance penetration is likely to rise post-covid-19 as individual and corporate customers would be more cautious towards such a crisis. IPRU management intends to improve the margin trajectory further with increased focus on protection plans amid a consistent dip in the share of ULIPs.
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"Though we appreciate emerging clarity regarding growth over margins, we prefer to remain watchful due to volatile economic trends and a probable rise in claims amid the pandemic. Maintain hold and underweight stance in insurance employee assistance programme," said the brokerage.
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