ICICI Pru down 9% as analysts maintain neutral tag post Q3

ICICI Prudential Life Insurance Company shares slumped 9% to an intraday low of Rs 577.90 on the BSE on Wednesday, January 22, despite the company reporting a 43% jump in its consolidated net profit for the quarter ended December 31, 2024. The profit stood at Rs 325 crore, compared to Rs 227 crore reported in the same period last year.

The Q3FY25 net premium income stood at Rs 12,261 crore which grew by 23% versus Rs 9,929 crore in the corresponding quarter of the previous financial year.

On a sequential basis, the profit after tax (PAT) was up 14% versus Rs 285 crore reported by ICICI Pru in Q2FY25. The net premium income was also up by 14% on a quarter-on-quarter basis versus 10,754 crore reported in the July-September quarter.

First year premium for Q3FY25 was reported at Rs 1825 crore which was down from Rs 2,059 crore in Q2FY25 and up from Rs 1,533 crore in Q3FY24. The renewal premium in the reported quarter stood at Rs 6,090 crore as against Rs 6,086 crore in Q2FY25 and Rs 6,080 crore in Q3FY24.

ICICI Prudential's Retail Weighted Received Premium (RWRP) grew 18.4% in Q3FY25 versus 12.7% growth seen in private industry and 4.8% in the overall industry.

Total annual premium equivalent (APE) in Q3FY25 stood at Rs 2,438 crore which was up by 28%. For the nine-month ended period, it was reported at Rs 6,905 crore, which was a 27% growth on a YoY basis.

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Should you buy, sell, or hold ICICI Pru Life's stock? Here's what analysts say:


Goldman Sachs
Goldman Sachs maintained a 'Neutral' rating on ICICI Prudential Life, with a target price of Rs 650, revised from Rs 665.

The analysis highlights strong Annual Premium Equivalent (APE) growth, but this comes at the cost of margins. The product mix has shifted towards lower-margin products, such as Unit Linked Insurance Plans (ULIPs) and group fund businesses.

ICICI Prudential Life has repriced its products in line with October yields, following a repricing in April, after missing opportunities in Q2. The proprietary channels, including agency and direct sales, are expected to grow faster due to ongoing investments. However, group term pricing remains a challenge for the company.

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Macquarie
Macquarie maintained a 'Neutral' rating on ICICI Prudential Life, with a target price of Rs 725.

The growth in Value of New Business (VNB) continues to disappoint. Macquarie factors in VNB margins of 23.9% in FY25E compared to 22.8% in the 9 months of FY25. It will be challenging to sustain the VNB margin at current levels, even as new surrender value rules are set to take effect from the second half of FY25. Issues with the captive channel remain a concern. The projected VNB Compound Annual Growth Rate (CAGR) for FY25-27E is 14%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)