ICICI Prudential shares up 6% after June quarter results; should investors buy, sell or hold?

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ICICI Prudential Life Insurance on Tuesday opened the earnings seasons for the life insurance sector with a massive Rs 500 crore claims arising due to the coronavirus pandemic. The insurer's share price went up by six percent on Thursday on the BSE.

Shares of ICICI Prudential Life Insurance were up almost six percent on Thursday on the BSE after the insurer on Tuesday opened the earnings seasons for the life insurance sector with a massive Rs 500 crore claims arising due to the coronavirus pandemic and reported a net loss of Rs 185.73 crore for the quarter ended June.
However, the company reported good all-around numbers, including a 71 percent growth in the key metric of the value of the new business premium. The second-largest private-sector life insurer had posted a net profit of Rs 287.59 crore in the year-ago period. In the previous quarter (January-March 2021), the insurer reported a profit of Rs 63.78 crore..
In a regulatory filing, ICICI Prudential said that the total income was down at Rs 16,724.05 crore in the quarter under review as against Rs 19,057.42 crore in the year-ago period. Of this, the net premium income was Rs 6,601.85 crore as against Rs 5,551.07 crore.
Here’s what brokerages have to say on ICICI Prudential’s stock and Q1 performance:
CLSA
The brokerage has maintained a 'buy' rating on the stock after its June quarter earnings with a target at Rs 725 per share. It noted that the company's first-quarter performance beat estimates notably with its VNB margin at 29.4 percent. The brokerage expects a VNB CAGR of 25% over FY21-23 and lifts the VNB estimates by 13-14 percent.
City
The brokerage has a 'buy' rating on the stock with the target at Rs 750 per share. It noted that the company's favourable product mix is driving VNB margin expansion. The brokerage has raised the company’s FY22/FY23 VNB estimates by six percent /three percent as they factor in the higher VNB margin. It has also lowered its FY22/FY23 profit estimates by 18 percent/13 percent as they factor in higher claims owing to COVID-19 pandemic and Opex.
Morgan Stanley
The brokerage has a 'buy' call on the stock with the target at Rs 700 per share. It noted that the company delivered a 20 percent VNB beat in a tough quarter. This pickup in VNB growth after recent sluggish growth should help rerate the stock, the brokerage said.
Goldman Sachs
The brokerage has a 'neutral' rating on the stock with the target at Rs 570 per share. The brokerage said, “ICICI Prudential’s Q1 beat was driven by group term, tops up COVID provisions. We revise FY22E-FY24 VNB estimates higher by up to two percent.”
The brokerage also said that the FY23 VNB guidance implies a CAGR of 28 percent over the next two years which is seemingly a tough act to achieve.
UBS
The brokerage has a 'buy' call on the stock with the target at Rs 690 per share. It noted that the company's strong core business performance will overshadow its weak accounting profits. The brokerage also noted that elevated claims and higher COVID reserving dents profitability.
It expects VNB margin to normalise with an evolving product mix. The company maintained its guidance to double its FY19 VNB by FY23, in line with estimates.

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