ICICI Prudential - Building A Robust Business Model: Motilal Oswal

Motilal Oswal Report

ICICI Prudential Life Insurance Company Ltd. has diversified its product mix as well as distribution mix over the past few years. ULIPs have seen increased traction owing to the optimism in the Indian equity markets.

Protection momentum is picking up with supply-side pressures easing.  On the distribution side, the share of the banca channel increased to ~29% in FY24.

The company has been investing in the agency and direct channels over the past couple of years.

ICICI Prudential achieved its stated guidance of doubling its FY19 value of new business by FY24 and expects healthy growth in VNB to continue, aided by:

1. opportunities in the long-term savings/protection businesses, and

2. improving persistency and cost ratios.

In FY24, the Protection business accounted for ~17% of total APE, while the non-Linked business made up 40%.

We estimate ICICI Prudential to deliver a 21% CAGR in VNB over FY24-26E. VNB growth will be fueled by premium growth and a slight improvement in margins, thereby enabling an operating return on embedded value of ~20% over FY26E. We reiterate our Buy rating with a target price of Rs 890 (based on 2.1 times March-26E EV).

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