Motilal Oswal Initiates Coverage on ICICI Prudential Life Insurance, Sets Price Target of Rs 650

ICICI Prudential Life Insurance Exceeds Expectations in 4QFY26

ICICI Prudential Life Insurance (IPRU) has reported a strong set of numbers for the fourth quarter of fiscal year 2026 (4QFY26), exceeding market expectations in several key areas. The company's annualized premium equivalent (APE) for the quarter stood at INR38.3 billion, representing a 6% beat and a growth of 9% year-over-year (YoY).

In terms of value of new business (VNB) margin, IPRU performed well, with a VNB margin of 25.2% in 4QFY26, surpassing the research firm's estimate of 24.6%. This represents a significant improvement from 22.7% in the corresponding quarter of the previous fiscal year. The absolute VNB for the quarter was INR9.7 billion, an 8% increase above estimates and a YoY growth of 21%. For the fiscal year 2026 (FY26), VNB grew 11% YoY to INR26.3 billion, resulting in a 190-basis point (bp) YoY expansion in VNB margin to 24.7%.

The company's economic value (EV) at the end of FY26 stood at INR530 billion, representing a 10.5% YoY growth. The operating return on economic value (RoEV) for the year was 11.9%. Management expects to maintain RoEV in the range of 13-14% in the long run, subject to yield curve movements and VNB trajectory.

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Estimate Adjustments and Outlook

In light of the strong 4QFY26 performance, the research firm has increased its APE/VNB estimates by 1.8% each for FY27 and FY28. However, due to variances in FY26, EV estimates have been cut by 1.2% each for FY27 and FY28. The firm maintains its BUY rating for IPRU, with a target price (TP) of INR650, based on 1.4x FY28E EV.

Recommendation

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Given the company's strong performance in 4QFY26 and the reiteration of its BUY rating, investors may consider IPRU as a potential investment opportunity. However, it is essential to note that the estimates and recommendations are subject to market conditions and other factors that may impact the company's performance.