ICICI Prudential stock soars 8%, hits over 2-yr high on healthy Q1 results

The company reported a healthy Q1FY25 performance, driven by a strong 34.4% APE growth and VNB margin at 24% resulting in a slight miss of around 1% on VNB to Rs 470 crore, analysts said.

Shares of ICICI Prudential Life Insurance Company (ICICI Pru) hit an over two-year high at Rs 690 on rallying 8 per cent on the BSE in Wednesday’s intra-day trade in an otherwise weak market after the company reported healthy June 2024 quarter (Q1FY25) earnings. In comparison, the BSE Sensex was down 0.53 per cent at 80,003 at 12:15 pm.

The stock of the private life insurance company surpassed its previous high of Rs 673.60 touched on July 10. The stock was now trading at its highest level since October 2021. It had hit a record high of Rs 724.50 on September 8, 2021.

 

The company’s new business premiums grew by 23.5 per cent year-on-year (YoY) to Rs 3,769 crore, against Rs 3,051 crore in the year-ago period. Its annualised premium equivalent (APE) was up 34.4 per cent YoY to Rs 1,963 crore in Q1FY25. APE is the sum of annualised first-year regular premiums plus 10 per cent weighted single premiums.

Retail APE grew by 42.2 per cent YoY from Rs 1,172 crore in Q1FY24 to Rs 1,666 crore in Q1FY25. The Retail Weighted Received Premium (RWRP) grew by 46.8 per cent in Q1FY25, outperforming both the overall industry and private life insurers for the third consecutive quarter, ICICI Pru said.

The assets under management (AUM) of the company increased from Rs 2.66 trillion at June 30, 2023 to Rs 3.09 trillion as of June 30, 2024, a growth of 15.9 per cent.

ICICI Pru reported a healthy Q1FY25 performance, driven by a strong 34.4 per cent APE growth and Value of New Business (VNB) margin at 24 per cent resulting in a slight miss of around 1 per cent on VNB to Rs 470 crore, said analysts at Emkay Global Financial Services.

While the quarter saw robust growth in ULIPs given the buoyancy in markets, exponential growth in the Annuity business led to strong margin delivery. Investments in the distribution network over the years have now started bearing fruit, with ICICI Pru clocking a 3rd consecutive quarter of better-than-industry growth. Hence, the management remains confident of the growth trajectory ahead. The company’s ULIP product with trail-based commission is being well received by distributors. Given limited exposure to Non-linked products, the management believes impact of new surrender regulations will be narrow, the brokerage firm said.

Given the company's robust distribution network, strong brand presence, and innovative product offerings, along with the budget-related overhang resolving, analysts maintain their BUY on the stock with revised up Jun-25E target price of Rs 750 per share (Rs 700 earlier), implying FY26E P/EV of 2x.

ICICI Pru has been delivering strong growth in the past three quarters and has been gaining market share. VNB margins have been under pressure owing to the product mix (higher share of ULIPs) and the allocation of costs, but scale benefits should help to offset the impact. In terms of surrender charges, the company expects a minimal impact, said Motilal Oswal Financial Services in result update.

“Considering the 1Q performance, we have cut our VNB margin estimates for FY25 and FY26. However, we have raised our APE growth estimates to factor in a strong trajectory in proprietary channels. We expect IPRU to deliver a 19.4 per cent CAGR in VNB over FY24-26. Going ahead, the company’s ability to sustain strong premium growth and VNB margins will be vital for re-rating of the stock,” the brokerage firm said and retain BUY with a target price of Rs 740 (based on 1.7x Mar’26E EV).