Credit Suisse maintains an outperform rating on ICICI Prudential and raised its target price to Rs515 from Rs495 earlier. ICICI Prudential remains top pick in life insurance for the global investment bank.
ICICI Prudential Life Insurance Ltd rose by about 15 percent in two straight days after the company reported fall in net profit but the value of new business (VNB) rose 93 percent to Rs 1,286 crore for the quarter ended March.
Most brokerage firms which have come out with their note post-March quarter results maintain their buy rating while some of them raised their target price to Rs 570 which translates into an upside of 37 percent return in the next 12 months.
ICICI Prudential Life Insurance’s standalone net profit for the March quarter declined 16.6 percent year-on-year on account of higher new business strain. The quarterly net profit stood at Rs 340 crore, compared to Rs 408.42 in the year-ago period.
However, the private life insurance company's value of new business (VNB) rose 93.1 percent to Rs 1,286 crore in Q4FY18 as compared to Rs 666 crore a year ago.
related news
VNB is the present value of all future profits to shareholders measured at the time of writing of the new business contract.
“Big VNB improvement is sustainable, and the global investment bank expects a further re-rating on the stock,” Nomura said in a note. The global investment bank increased its target price to Rs570 and is also Nomura’s preferred insurance pick.
VNB margin improvement looks sustainable, and Nomura expects FY18 margins at 18-19 percent VNB margin over FY19-20F.
Another global brokerage firm, Credit Suisse maintains an outperform rating on ICICI Prudential and raised its target price to Rs515 from Rs495 earlier. ICICI Prudential remains top pick in life insurance for the global investment bank.
The March quarter remain strong while, on the other hand, we saw a sharp rise in the margins and RoEV. The margin was driven by product mix and cost saving, said the Credit Suisse report.