ICICI Prudential Life Insurance Co. Ltd stock rose as much as 4.4% on BSE today, as the company said its total income more than doubled in the March quarter to Rs 16,053.89 crore.
The company, however, reported a 23% decline in consolidated net profit at Rs261.02 crore for the quarter ended March.
The stock was trading at Rs369.80, up 1.83% at 10:56am on BSE, after hitting an intra-day high of Rs379.45. The stock also saw a spurt in volume of shares being traded.
ICICI Life saw its total premium rising by 14.3% from Rs27,069 crore to Rs30,930 crore in 2018-19.
The company recommended a final dividend of Rs1.55 per share of face value of Rs10 each.
With regard to the value of the new business (VNB), ICICI Prudential said the margin increased to 17% from 16.5% in the previous fiscal year. The absolute VNB for 2018-19 was Rs1,328 crore.
VNB is used to measure the profitability of the new business written in a period. It is the present value of all future profits to shareholders measured at the time of writing of the new business contract.
After the March quarter results, CLSA raised its target price on the stock to Rs475 from Rs 450 earlier, maintaining its ‘buy’ rating on the company.
Over FY19-21, CLSA sees VNB rising at a compounded annual growth rate (CAGR) of 24%, aided by a rise in annualized premium equivalent. Additionally, over FY19-21, the global investment bank sees a 250 bps expansion in its margin towards 20%.
The embedded value (EV) of the company increased 15.1% to Rs21,623 crore at the end of March. EV is similar to the book value of companies in other sectors. It is sum of the company's net worth and the present value of all future profits to shareholders from the existing book of the company (including new business written in the year).
CLSA said lower dividend payout will support EV growth, and valuation is at a 40% discount to HDFC Life which increases the scope for a re-rating.
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