ICICI Securities Recommends Buying ICICI Prudential Life Insurance with a Target Price of Rs 705
ICICI Prudential Life Insurance Company Sees Muted Volumes for FY26 Despite VNB Growth
ICICI Prudential Life Insurance Company (ICICI Prudential) witnessed a recovery in retail Annual Premium Equivalent (APE) in the second half of FY26, with a growth of 8.8% from October to February. However, the company experienced weak growth in the first half of FY26, with a decline of 8%, and a macro-impacted March 2026, down 0.5%. This led to muted volumes for the fiscal year FY26, with retail APE declining by 0.1%.
Despite the challenges, ICICI Prudential's diversified channel mix, comprising agency, direct, banca, partnership distribution, and group APE, which stands at 25%, 13%, 30%, 13%, and 18%, respectively, as of FY26, remains unique compared to its peers and significantly trims business risks. The company has also seen an improvement in its Value of New Business (VNB) growth, which rose by 10.9% in FY26. Additionally, the VNB margin stood at 24.7% in FY26, despite hurdles such as the non-availability of input tax credits post removal of GST and a drop in persistency.
ICICI Prudential's Strong Financial Performance Supports Attractive Valuations
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ICICI Prudential's ability to register a sustained Return on Embedded Value (ROEV) of 13% is a testament to its strong financial performance. With possible improvements ahead, the company's valuations remain attractive. The diversified channel mix of ICICI Prudential also positions it well in terms of any risk of channel disruption from adverse regulation.
Outlook and Recommendation
Our BUY rating for ICICI Prudential captures possible EV growth till FY28, balancing volume and margin outlooks. The cut in multiple reflects lower volume growth. ICICI Prudential is also better placed in terms of any risk of channel disruption from adverse regulation, given its diversified mix. The focus remains on growing APE and VNB on an absolute basis, while the VNB margin base is now set at ~25% levels.
| Segment | Growth in H2FY26 | Growth in H1FY26 | Growth in Mar'26 | FY26 Growth |
|---|---|---|---|---|
| Retail APE | 8.8% | -8% | -0.5% | -0.1% |
| VNB Growth | - | - | - | 10.9% |
| VNB Margin | - | - | - | 24.7% |
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Investor Takeaway
Investors should consider buying ICICI Prudential Life Insurance with a target price of Rs 705.
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