ICICI Pru Life Profit Surges 20% as Analysts Debate Top-Line Recovery
Overview
ICICI Prudential Life Insurance reported a 19.82% year-on-year rise in Q3 net profit to ₹390.20 crore. Despite resilient margins and positive analyst views on long-term profitability, the stock dipped 2.16%. Analysts weigh margin strength against muted top-line recovery and potential regulatory shifts, with targets ranging up to ₹830.
Stocks Mentioned
ICICI Prudential Life Faces Market Scrutiny Despite Profit Jump
ICICI Prudential Life Insurance shares traded under pressure, closing 2.16% lower at ₹699.25 on the BSE. This occurred despite the company announcing a robust 19.82% year-on-year surge in its standalone net profit to ₹390.20 crore for the December quarter. The stock had earlier touched a high of ₹700.15, a 2% gain from its previous close.
The market's muted reaction suggests investors are weighing the strong profit growth against concerns over the pace of top-line recovery and potential regulatory shifts impacting the sector.
Resilient Margins Amid Profit Growth
Analysts largely maintained positive stances, highlighting the insurer's resilient margins, estimated around 24%, and strong value of new business (VNB). Jefferies, for instance, reiterated its buy rating with a ₹830 target, noting that VNB was ahead of expectations, largely due to margin resilience and a 4% rise in annualised premium equivalent (APE).
The company managed to neutralize the Goods and Services Tax (GST) impact through a better product mix, a supportive yield curve, and tight cost control. However, Jefferies flagged that persistency remains weak, potentially impacting embedded value.
Analyst Ratings Diverge on Outlook
Motilal Oswal maintained its buy call at ₹800, emphasizing long-term profitability supported by GST exemption and increased traction of non-linked products. CLSA assigned an outperform rating at ₹790, citing margin pressure from GST loss being offset by a shift toward retail protection, better product margins, and yield curve movements. HSBC also stayed constructive with a buy rating and ₹790 target.
Nomura, holding a neutral stance with a ₹740 target, acknowledged a "good save on the margins" but expects full-year FY26 VNB growth to remain in single digits. Goldman Sachs, however, remains more cautious. It retained its neutral rating but cut its target price to ₹690, noting that Q3 APE growth was muted at 4% year-on-year.
