Valuations support ICICI Prudential Life despite margin challenges

After a sharp selloff, IPRU looks relatively inexpensive in valuations compared with its peers. Investors will have to offset continuing margin pressures versus the trend of volume growth

ICICI Prudential Life Insurance (IPRU) disappointed the market even though some analysts said the Q3FY25 results were in line. Most analysts cut margin estimates. The insurer reported M9FY25 growth of 8.5 per cent year-on-year (Y-o-Y) in value of new business (VNB) premium to Rs 1,575 crore, while total annual premium equivalent (APE) grew 27.2 per cent to Rs 6,910 crore. But margins contracted by 390 basis points (bps) Y-o-Y to 22.8 per cent. On a quarter-on-quarter (Q-o-Q) basis, VNB margins contracted 220 bps from Q2FY25 levels of 23.4 per cent.

 

The margin compression was explained by significant growth in group