Buy ICICI Prudential Life Insurance; target of Rs 509 KR Choksey

KR Choksey's research report on ICICI Prudential Life Insurance

The Gross Written Premium (GWP) grew 7% YoY and 52% QoQ on better single premiums. Value of New Business (VNB) grew 99% QoQ, same level in Q2FY20. The margins improved 624 bps YoY and 288 bps QoQ. The increase in VNB margin is primarily on account of increase in protection mix and growth in non-linked savings. Solvency improved 40 bps QoQ to 206%. Cost ratios fell to 14.3% from 16.6% last year as discretionary spend fell. The cost to TWRP for the savings business stood at 8.8% in H1FY21 compared to 11.0% in H1FY20.

Outlook

We value it at a 2.7x P/EV on FY22E EVPS of INR 187 and a VNB multiple of 25x to arrive at a weighted average TP of INR 509 per share (50:50 weights on the P-EV and appraisal value methodology); indicating a 25% upside to the current market price. Accordingly, we reiterate our “BUY’ recommendation on the shares of ICICI PruLife.

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