Q3FY23 Review: ICICI Prudential Life Insurance Company: Sharp margin expansion; eyes on APE growth now

19 Jan 2023 , 10:12 AM

ICICI Prudential Life Insurance Company (IPRU) reported Q3FY23 results with 6% YoY APE decline, led by 24% fall in ULIPs, while Protection and Non-linked (including annuities) grew 13%/11% YoY. Protection was buoyed by group, though Retail saw first quarter of QoQ growth since Q4FY22. Banca channel declined 34%, as the ICICI Bank channel contribution dropped to 14.8% in Q3 versus ~25% in FY22. VNB margin saw 720-bps YoY expansion to 33.9%, led by higher share of Protection and Non-par savings mix — hence, VNB grew 20% YoY.

IPRU reiterated its aspiration of doubling FY19 VNB over four years, implying 23% growth in Q4FY23 and indicating 15-20% VNB growth beyond FY23 as well. 

Analysts at IIFL Capital Services believe IPRU’s product and distribution mix is becoming more balanced. They forecast 14%/15% APE/VNB CAGR over FY23-25. The stock is trading at 1.7x on FY24 P/EV, close to its trough valuations; and is attractive given the VNB growth outlook. IPRU’s well-established franchise and strong capital position make it an attractive story to own in the longer term. Key risk: regulations.

Analysts at IIFL Capital Services have maintained Buy recommendation on the stock.