The life insurance company's VNB margin during the quarter expanded 400 basis points (bps) to 21 per cent from 17 per cent in Q1FY19, primarily on account of increase in protection mix. The company’s profit after tax during the quarter remained flat at Rs 285 crore against Rs 282 crore in the corresponding quarter of previous fiscal.
“The management reiterated its target of doubling VNB in the next 3-4 years. With the sustained weakness in savings premium growth the improvement in the other 3Ps (Protection, Persistency and Productivity) remains key to achieving this target. The robust margin expansion led by very strong increase in share of protection in the product mix, improving productivity, and stable persistency has ensured that the company is well on track to double its VNB over the next 3-4 years,” analysts at SBICAP Securities said in result review.
The brokerage firm reiterates ‘buy’ rating on ICICI Pru with the increased 12-month target price of Rs 500. The current valuation looks unfair for a strong franchise like ICICI Pru with good VNB growth outlook over the medium term. The current valuation seems to be ignoring the improvement in profitability and a likely revival in growth, it said.
Analysts at Prabhudas Lilladher expect ICICI Pru’s growth to be lower than industry but retail protection growth should be better. Margin sustainability will remain key as saving business improves., they said The brokerage firm retains ‘buy’ rating on the stock with target price of Rs 511 per share.
At 01:08 pm, ICICI Pru was trading 6 per cent higher at Rs 406 on the BSE, as compared to 0.15 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped seven-fold with a combined 7.54 million shares changing hands on the BSE and NSE so far.