Emkay Global Financial has given Buy recommendation for ICICI Pru Life with a target price of Rs. 620 in its research report issued on Oct 17, 2022
Emkay Global Financial’s research report on ICICI Pru Life
IPRU delivered a decent H1FY23 financial performance, led by sharp moderation in APE growth in Q2, and offset by sustained strong margins owing to a favorable product mix. While the robust VNB margins continue to impress, we still have concerns about return of topline (APE) growth. In this backdrop, we adjust our FY23-25 estimates to account for the developments in H1 (higher margin, but weaker growth) and reiterate our BUY rating, with our Sep-23 Target Price at Rs620/share. Post the recent underperformance of IPRU shares, the current valuation at ~FY23E P/EV of 2.1x is attractive, but return of growth is needed to drive a re-rating of the stock, in our view.
Our TP comes down to Rs620 from Rs670, as we increase our Cost of Equity (CoE) as per the Appraisal Value method, to 13.5% from 12.5%. The change in CoE reflects the addition of some discount on EV that unwinds at a lower rate than CoE. We reiterate our BUY on IPRU, on valuation support (FY23E P/EV of 2.1x). (Exhibits 8-10)