Global brokerage CLSA has upgraded its rating on ICICI Prudential Life Insurance Company (ICICI Pru) to 'buy' from 'Outperform' after the company's earnings in the fourth quarter of fiscal 2021 were in line with estimates. CLSA has a target price of Rs 575 per share.
The company's Q4FY21 performance was in line with 27 percent APE growth versus a contraction of 27 percent in 9MFY21, CLSA said. It added that FY21 saw multiple headwinds with a big contraction in the ULIP business but VNB performance was well managed.
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ICICI Pru's net profit, however, declined by 64.2 percent to Rs 64 crore in January-March 2021 from Rs 179 crore for the year-ago quarter while the same for the full year slipped to Rs 960 crore from Rs 1,069 crore in the previous fiscal.
However, a Rs 7,400 crore of investment income - gains from the market - as against a loss of Rs 18,000 crore in January-March 2020 due to the pandemic, has helped it cushion the hit, chief executive and managing director NS Kannan said.
"Reinsurance-related tightening will remain a headwind in the near term but we expect IPRU to turn the corner on APE," CLSA said.
It expects a 17 percent Cagr over FY21-23CL versus a 17 percent contraction over FY18-21 driven by a more diversified product and distribution mix, and operating leverage will possibly cushion any protection business impact.
IPRU has de-rated over past 3-4 years due to continued market share losses which can reverse in our opinion, CLSA added.
(Edited by : Ankit Gohel)
