A prominent brokerage firm has issued a positive outlook for two major insurance stocks under the ICICI Group—ICICI Prudential Life and ICICI Lombard General Insurance. According to their analysis, ICICI Prudential is anticipated to surge nearly 22% over the next year, driven by a robust Q4 FY25 performance. Meanwhile, ICICI Lombard is projected to see its share price increase by more than 15% in the same timeframe.
Analysis of ICICI Prudential Life
The brokerage has upgraded its stance on ICICI Prudential Life from ‘Hold’ to ‘Buy.’ This decision follows a significant 33.1% year-on-year increase in the company’s annual premium equivalent (APE) for Q4 FY25, leading to expectations of a further 22% stock upside. However, the target price has been slightly adjusted downwards to Rs 690 from Rs 720 due to a 7.8% decline in retail APE, resulting in an overall 3.2% drop in total APE.
- Key Figures:
- Value of New Business (VNB) margin remains stable at 22.7%.
- VNB increased by 2.4% YoY to Rs 800 crore, slightly below the brokerage’s estimate of 4.8%.
In Q4 FY25, ICICI Prudential Life reported a remarkable 122% year-on-year profit increase, reaching Rs 385 crore, up from Rs 174 crore a year earlier. The company’s net premium income rose by 11% YoY, totaling Rs 16,369 crore, compared to Rs 14,788 crore in the same quarter of the previous fiscal year. Additionally, a final dividend of Rs 0.85 per equity share was announced.
Insights on ICICI Lombard General Insurance
For ICICI Lombard General Insurance, the brokerage has maintained a ‘Buy’ rating but has reduced the target price by 12.5%, adjusting it from Rs 2,400 to Rs 2,100. This revision comes in the wake of a modest 10.2% year-on-year growth in gross written premium (GWP), attributed to slowing new vehicle sales and deferred accounting practices for long-term products. The company reported a Rs 2,100 crore underwriting loss, impacting its investment income.
- Profit Overview:
- Adjusted profit after tax (APAT) decreased by 1.9% YoY and 29.7% sequentially, landing at Rs 5,100 crore.
- Due to the slowdown in new auto sales, the brokerage has also lowered its FY26/27 APAT forecasts by 6.8% and 6.7%, respectively.
In the latest quarter, ICICI Lombard’s net profit fell by 1.9% YoY to Rs 509.6 crore, down from Rs 520 crore in the same period last year. Despite this, gross premium income for Q4 FY25 climbed 10.2% YoY to Rs 6,903.9 crore, although operating profit saw a significant decline of 25.9%, totaling Rs 415.9 crore.
In summary, both ICICI Prudential Life and ICICI Lombard General Insurance present intriguing investment opportunities, albeit with some challenges reflected in their latest earnings reports. Investors should keep an eye on the evolving market conditions that may impact these key players in the insurance sector.
