ICICI Prudential Share Price Target at Rs 750: ShareKhan Research
ICICI Prudential Life Insurance has delivered a quarter marked by margin expansion but subdued growth. Mirae Asset Sharekhan has reiterated its BUY rating on the stock with a target price of Rs 750, citing the company's diversified product mix and improving distribution efficiency. VNB margins saw a significant uptick, buoyed by a shift toward high-margin protection products, while Annualized Premium Equivalent (APE) recorded a slight contraction. Amid regulatory changes and evolving product preferences, ICICI Prudential continues to recalibrate its portfolio with a long-term focus on profitability and market leadership.
Key Performance Metrics for FY25
The company reported mixed financial results for Q4FY25 and FY25.
| Metric | FY24 | FY25 | Change (%) |
|---|---|---|---|
| APE (Rs crore) | 9,046 | 10,407 | +15% |
| Value of New Business (VNB) | 2,227 | 2,370 | +6% |
| VNB Margin (%) | 24.6% | 22.8% | -180 bps |
| Embedded Value (EV) (Rs crore) | 42,335 | 47,951 | +13.3% |
| Net Profit (PAT) (Rs crore) | 851 | 1,186 | +39% |
APE saw a strong 15% growth in FY25, led by segments such as ULIP (+29%), retail protection (+25%), and group fund business (+107%).
VNB Margins: A Positive Surprise
The standout metric for the quarter was the improvement in VNB margin to 22.7% in Q4FY25, up 120 basis points year-on-year and 150 bps sequentially. This beat the consensus estimate of 21.9%. The margin uplift was largely attributable to a shift in product mix toward non-par and protection segments, which offer superior margins relative to ULIPs.
APE Performance and Channel Dynamics
While the annual APE showed healthy growth, the Q4FY25 APE declined by 3% YoY due to subdued performance across key channels:
- Agency channel: -20% YoY
- Direct channel: -8% YoY
- Corporate agents: -11% YoY
These declines were attributed to a high base effect and tepid ULIP demand during the quarter. Conversely, bancassurance and annuity businesses posted stronger growth.
Embedded Value and Profitability Outlook
ICICI Prudential’s Embedded Value (EV) grew by 13.3% YoY to Rs 47,951 crore, supported by a strong operating performance. However, the company absorbed a one-time hit of Rs 254 crore to EV due to adjustments in mortality assumptions for group credit life protection, reflecting prudent actuarial practices.
The Return on Embedded Value (RoEV) for FY25 stood at 13.1% and is expected to improve slightly in the coming years, reaching 13.5% in FY27.
Channel Strategy and Product Innovation
ICICI Prudential continues to focus on strengthening its distribution matrix. Over 50% of its retail APE in FY25 came from proprietary channels such as agency and direct. The company launched ICICI Pru Gift Select, a non-par guaranteed income product, in response to market volatility—demonstrating a nimble approach to evolving customer preferences.
Financial Valuation and Investment Thesis
The stock is trading at 1.5x/1.3x FY26E/FY27E EV, and 30.2x/26.5x FY26E/FY27E P/VNB, making it a relatively attractive proposition within the insurance space.
| Company | FY26E P/EV | FY27E P/EV | FY26E P/VNB | FY27E P/VNB | RoEV FY26E |
|---|---|---|---|---|---|
| ICICI Prudential | 1.5 | 1.3 | 30.2 | 26.5 | 13.3% |
| HDFC Life | 2.3 | 2.0 | 31.4 | 26.7 | 17.0% |
Despite the higher RoEV for HDFC Life, ICICI Prudential offers a more reasonable entry point with room for valuation re-rating.
Management Commentary: Balancing Growth and Margins
The leadership remains committed to achieving APE growth ahead of the industry average. Their multi-pronged strategy involves launching first-of-its-kind products, refining channel productivity, and ensuring a balanced product mix with more high-margin offerings like annuities and non-par policies.
Risks to Watch
While the fundamentals remain sound, key risks include:
- Slower growth in APE due to weak demand for ULIPs or regulatory disruption
- Inability to maintain or improve VNB margins
- High competition from private peers and evolving customer behavior
The company's profitability is closely tied to policy changes, economic cycles, and competition in the life insurance domain.
Long Term Investment Outlook
ICICI Prudential Life Insurance has delivered a nuanced performance with improving margins amid moderated growth. With the management focused on leveraging its multi-channel strategy and innovative product suite, Mirae Asset Sharekhan's target of Rs 750 appears justified. For long-term investors, the stock offers a compelling opportunity to participate in India's underpenetrated insurance sector, with a clear roadmap toward profitable and sustainable growth.
