ICICI Prudential Life Insurance saw its shares plummet by 10% to reach a low of ₹572, despite reporting a 43% increase in net profit for Q3 to ₹326 crore. The company’s net premium income for the quarter ended December 2024 rose to ₹12,261 crore from ₹9,929 crore a year ago, while its assets under management (AUM) increased to ₹3.10 lakh crore from ₹2.86 lakh crore, as per a stock exchange filing.
Brokerages have slashed target prices for ICICI Prudential due to disappointment over the VNB growth margins, which were impacted by a negative product mix. HSBC reduced the target price from ₹825 to ₹780 but maintained a buy rating. Motilal Oswal reiterated a buy rating with a target price of ₹780, highlighting the importance of sustaining strong premium growth and improving VNB margin in the future.
However, Motilal noted that the VNB margin was under pressure in the quarter, primarily due to a shift in product mix towards higher ULIPs. The brokerage also mentioned that changes in the commission structure were already implemented, leading to a sequential decline in commission costs. Meanwhile, Morgan Stanley cut VNB estimates for FY25-27 and maintained an ‘equal-weight’ rating on the stock with a target price of ₹695.
JM Financial pointed out that ICICI Prudential trades at a significant discount to HDFC Life and SBI Life, supported by their parent banca channels. The brokerage noted that volume growth could provide stability for ICICI Prudential in the medium term, maintaining a buy rating with a revised target price of ₹777. Yes Securities remained cautious with an ‘add’ rating at a revised target price of ₹750.
Nuvama Institutional Equities retained a hold call on the stock with a revised target price of ₹720, citing a product mix change that favored low-margin linked and group savings businesses, impacting VNB margins. Macquarie and Goldman Sachs maintained neutral stances with target prices of ₹725 and ₹650, respectively.
ICICI Prudential’s shares were trading lower by 7.64% on the NSE at ₹587 and 7.50% on the BSE at ₹588.20 as of 12.10 pm. Despite the market reaction, analysts are closely monitoring the company’s performance and growth prospects in the coming quarters.
