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Business News/ Markets / Stock Markets/  ICICI Prudential share price falls over 6% after Q4 results; Should you buy, sell or hold the stock?
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ICICI Prudential share price falls over 6% after Q4 results; Should you buy, sell or hold the stock?

ICICI Prudential Life Insurance Company reported a net profit of ₹174 crore for the fourth quarter of FY24, falling 26% from ₹235 crore in the year-ago period. The company’s net premium income in Q4FY24 rose 17% to ₹14,788 crore from ₹12,629 crore, YoY.

ICICI Prudential shares fell as much as 6.73% to ₹553.15 apiece on the BSE. (Photo: Reuters)Premium
ICICI Prudential shares fell as much as 6.73% to 553.15 apiece on the BSE. (Photo: Reuters)

ICICI Prudential share price declined over 6% in early trade on Wednesday after the company reported its Q4 results with a sharp drop in net profit. ICICI Prudential shares fell as much as 6.73% to 553.15 apiece on the BSE.

ICICI Prudential Life Insurance Company reported a net profit of 174 crore for the fourth quarter of FY24, falling 26% from 235 crore in the year-ago period. The company’s net premium income in Q4FY24 rose 17% to 14,788 crore from 12,629 crore, YoY.

Value of new business (VNB) declined 26.5% to 776 crore and VNB margin fell to 21.5% from 32% hurt by persistent decline in demand for high-value policies and as customer preference shifted towards low-margin products.

The annual premium equivalent (APE) increased 9.5% to 3,615 crore from 3,300 crore, YoY.

Read here: Q4 Results: ICICI Prudential reports narrower new business margin for FY 2024

Some brokerages have cut their earnings estimates for ICICI Prudential Life Insurance Company after its Q4 results failed to meet expectations. 

Here’s what brokerages have to say on ICICI Prudential Q4 results and ICICI Prudential share price:

Motilal Oswal 

Considering ICICI Prudential Q4 results, brokerage firm Motilal Oswal cut its estimates for APE and VNB margin for FY25 and FY26. It expects the company to deliver an 18% CAGR in VNB over FY24-26. 

“ICICI Prudential Life Insurance Company delivered a weaker-than-expected performance in 4Q. Lower product-level margin remains a concern over the medium term. However, premium growth delivery would be key for valuation re-rating. While the business from the ICICI Bank channel has settled at 12-15% of the overall APE, strong growth in proprietary channels is expected to sustain, given the investments made over the past couple of years," Motilal Oswal said.

Also Read: Cyient DLM share price surges over 13% after Q4 PAT surges 81% YoY

Going ahead, strong premium growth and steady VNB margins would drive re-rating of the stock, it added.

Motilal Oswal retained its ‘Buy’ rating and ICICI Prudential share price target of 700 apiece.

Kotak Institutional Equities

Kotak Institutional Equities believes ICICI Prudential Life is gradually getting back on a growth trajectory supported by strong proprietary channels and stable business from its parent. Higher payouts in multi-insurer shops continue to put pressure on margins. It finds the APE trajectory gradually turning up even as margins may remain rangebound, closer to current lows

The brokerage revised down its VNB estimates by ~2% to reflect lower margins, its EV forecasts increased by 3-4% reflecting higher investment variance and unwinding rates. Kotak Equities expects the company to deliver mid-teen (similar to industry) growth with flat margins.. 

It retained a ‘Buy’ call on ICICI Prudential shares with a target price of 685 apiece.

Also Read: Tata Elxsi share price slips 5% post Q4 results; A 700% dividend announcement fails to lift investor sentiments

JM Financial

While the company is committed to invest in its channels, JM Financial sees scope for margin expansion by 2HFY25, led by product mix shift away from ULIPs and opex normalisation at these levels. 

It maintained FY25e/FY26e VNB estimates at 27.4 billion and 33.6 billion. With limited support from ICICI Bank channel, it sees ICICI Prudential stock trade at a discount to other bank-led life insurers. 

JM Financial maintained its ‘Buy’ call with a ICICI Prudential share price target of 736 apiece.

At 9:45 am, ICICI Prudential shares were trading 2.82% lower at 576.40 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 24 Apr 2024, 09:47 AM IST
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