ICICI Securities rates ICICI Prudential Life 'Buy', sets Rs 705 target

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AuthorVihaan Mehta|Published at:
ICICI Securities rates ICICI Prudential Life 'Buy', sets Rs 705 target
Overview

ICICI Securities rated ICICI Prudential Life 'Buy', with a Rs 705 target. The insurer achieved strong 10.9% growth in value of new business (VNB) despite flat retail premium sales for FY26, thanks to better product mix and cost controls. Its diverse sales network reduces risk, supporting attractive valuations based on steady return on embedded value.

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ICICI Securities has initiated a 'Buy' rating on ICICI Prudential Life Insurance, setting a target price of ₹705. The brokerage highlighted the company's sustained earnings growth potential and attractive valuation, despite mixed key financial results for fiscal year 2026.

FY26 Performance Drivers

Retail Annual Premium Equivalent (APE) sales were flat for FY26, showing a slight contraction of 0.1%. However, the second half of the year saw a recovery, with APE rising 8.8% from October to February. This followed a weaker first half (down 8%) and a small dip in March 2026 (-0.5%), which affected the full-year figure. Despite the flat premium sales, the Value of New Business (VNB) grew significantly by 10.9% in FY26. This strong VNB growth was driven by a better mix of products sold, successful cost management, and favorable market interest rates.

Margin Strength and Diversification

The company maintained a healthy VNB margin of 24.7% in FY26. This was achieved even with challenges like the loss of input tax credits due to GST changes and a drop in policy renewals. ICICI Prudential Life's business model is strengthened by its diverse sales channels, including agency, direct sales, bancassurance (banca), partnerships, and group insurance. These channels, which made up 25% (agency), 13% (direct), 30% (banca), 13% (partnerships), and 18% (group) of APE in FY26, help reduce business risks compared to competitors.

Outlook and Valuation

ICICI Securities expects continued growth in embedded value (EV) through FY28. The 'Buy' rating balances expectations for sales volumes with margin performance. The brokerage has slightly reduced its valuation multiple to reflect the slower expected sales growth. The firm noted that the insurer's diverse structure also offers protection against potential regulatory changes. The company aims to increase its total APE and VNB, with VNB margins expected to stay around 25%. Valuations are considered attractive, supported by the company's consistent 13% Return on Embedded Value (ROEV), with room for further growth.

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Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.