Target: ₹640

CMP: ₹521.05

ICICI Prudential Life Insurance reported Q2FY24 net premium income growth of 4.6 per cent YoY to ₹10,022 crore, which was led by single premium, which grew by 7 per cent y-o-y to ₹3,005 crore. Annualised Premium Equivalent (APE) increased by 3 per cent YoY to ₹2,063 crore, remaining slightly below consensus. Net commission during the quarter increased by 87 per cent y-o-y to ₹771 crore due to the regulatory norms leading to increase in overall cost ratio to 26.2 per cent from 21.6 per cent in Q2-FY23.

Owing to the increased costs, shareholder’s account surplus/deficit saw a de-growth of 42 per cent y-o-y to ₹301 crore.

We remain positive on ICICI Prudential as the company continues to see growth in the linked products and its continuous focus on expanding capacity. The expanding capacity strategy is expected to see results in the coming quarters, which will lead to an increase in the company’s market share. However, on the margin front, cautiousness continues, as it saw a dip during the quarter.

On the financial front, we expect APE/NBP/VNB to grow at 19 per cent each CAGR over FY23–25, but margin growth is slightly revised downward to 32 per cent for FY25.