Q4FY23 Review: ICICI Prudential Life: Non-par drives growth; Distribution showing strength

21 Apr 2023 , 11:22 AM

ICICI Prudential Life Insurance Company (IPRU) reported Q4FY23 results, with 26% YoY APE growth led by 104% growth in Non-linked and Annuities; while ULIP and Protection saw decline of 24%/1% YoY. Protection was buoyed by a sharp pickup in Retail protection (28% YoY); Group saw 7% YoY decline. Banca channel declined 8%, as the ICICI Bank channel (-43% YoY) contribution dropped to 8.8% in 4Q versus ~25% in FY22. VNB margin saw 230 basis points YoY expansion to 32%, led by higher share of Protection and Non-par savings mix – hence, VNB grew 36% YoY. Despite more than doubling their VNB over FY19-23, as guided, management remains confident of healthy VNB growth going forward too. 

Analysts at IIFL Capital Services believe IPRU’s product and distribution mix are becoming balanced. With the ramp-down from ICICI Bank channel largely behind, IPRU could start delivering consistent double-digit APE growth. Analysts at IIFL Capital Services are forecasting 11%/13% APE/VNB CAGR over FY23-25. They have raised their 12-month Target Price to Rs 610 (from Rs 570) on higher VNB growth. The stock is trading attractively at 1.4x on FY25 estimated P/EV, at trough valuations.