What Dalal Street Made Of ICICI Prudential’s Fourth Quarter Performance

Shares of ICICI Prudential Life Insurance Ltd. rose nearly 10 percent to Rs 459, its highest level in nine months after most analysts raised their price target on the stock.

India’s second largest private life insurer by market share reported a net premium growth of 14 percent in the March quarter driven by higher renewals. The stock is expected to return anywhere between 11 percent and 36 percent in the next 12 months, according to brokerages.

Here’s what analysts had to say on ICICI Prudential's March quarter numbers:

CLSA

• Maintained ‘Buy’ with a target price of Rs 560, implying a potential upside of 33.9 percent from the last regular trade.
• March profit remained below estimates due to higher new business strain.
• Tad disappointed by slower growth in new premiums in the previous quarter.
• Expect compounded annual growth rate of 20 percent in premiums over financial years 2018-2021.
• Raise Margins forecast to 19 percent by March 2020, aided by better premium-mix and persistency. Expect return on embedded value to stabilise near 19-20 percent.
• ICICI Prudential is among top picks in the sector.

Credit Suisse

• Maintained ‘Outperform’; raised target price to Rs 515 from Rs 495, implying a potential upside of 23.2 percent from the last regular trade.
• March quarter results were strong; sharp rise seen in margins and RoEV.
• Margin was driven by product mix and cost saving.
• Improvement seen in persistency ratio.
• ICICI Prudential remains top pick in life insurance.

Goldman Sachs

• Maintained ‘Buy’ with a target price of Rs 485, implying a potential upside of 11 percent form the last regular trade.
• Embedded value and value of new business continued to show strong growth.
• Less concerned about muted sales growth in the previous quarter.
• Expect ICICI Prudential to maintain strong growth momentum.

Nomura

• Maintained “Buy’; raised target price to Rs 570 from Rs 540, implying a potential upside of 36.3 percent form the last regular trade.
• ICICI Prudential surprised positively during March quarter.
• With better-than-expected value of new business improvement and core RoEV and conservatism in persistency assumptions, the company deserves a re-rating.
• Hike in price target was driven mainly by an increase in our value of new business margin assumptions.
• We have increased our long-term margin expectations to 18.5 percent from the previous 16.5 percent.