18 Jan , 2024 By : Debdeep Gupta
ICICI Prudential Life Insurance crashed over 10 percent on January 18, making its steepest fall in over a year. The stock saw a selloff as the insurer's October-December 2023 quarter results came way below the Street estimates, along with a sharp fall in margins.
At 10:30 am, the stock recouped some losses and traded at Rs 485.60 on the NSE, down 5 percent from its previous close, after hitting an intraday low of Rs 464.
For Q3FY24, ICICI Pru Life's VNB (value of new business) declined 29.5 percent YoY to Rs 436 crore, against the Moneycontrol estimate of Rs 547 crore. VNB margins came in at 23 percent, over 600 basis points below the estimate of 29.3 percent.
The impact on margins was mainly due to a change in product mix, the management said in the earnings concall. ULIP sales, which fetch lower margins, were higher in the October-December 2023 quarter.
ULIP stands for unit-linked insurance products. These are linked to the market as a combination of insurance plus investment. With the markets scaling new highs last calendar year, ULIP sales grew fast.
For Q3FY24, ICICI Pru Life's APE (annualized premium equivalent) jumped 4.72 percent on-year to Rs 1,907 crore, slightly higher than the Moneycontrol estimate of Rs 1,856 crore. In the earnings conference, the management said that credit life and group term business provide an exciting opportunity, going ahead.
The company's commission expenses have increased after re-designed the commission structure, which has also put pressure on margins. ICICI Pru Life has been diversifying its distribution to non-ICICI Bank channels.
On the distribution side, domestic broking firm Motilal Oswal pointed out that the share of banca, corporate agents, and group channels declined sequentially to 26.8 percent, 11 percent, and 16.4 percent, respectively, in Q3 FY24.
Most brokerages have not shared revised ratings, target prices, and earnings estimates as the call took place early morning on January 18. Morgan Stanley has an 'overweight' call with the target at Rs 660 per share but is awaiting clarity if FY24 performance should be extrapolated to FY25.
0 Comment