Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
S A A R T H I
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
SEBI
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
IPOs
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Research
Arbitrages
Equity
Market Whispers
Tax Planning
Home
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
Research

| More

Neutral on ICICI Prudential Life Insurance Co. Ltd. IPO - Angel Broking

Posted On: 2016-09-18 20:03:12

ICICI Prudential(I-Pru) is the largest Pvt Sector insurance player with a market share of 21.9% in the pvt sector and 11.3% share in the overall industry. The company had a persistency ratio of 82.5% and solvency ratio of 320%, one of the best in the industry.

Embedded Value reflects the value of existing & expected profit from past policies in force: I-Pru's FY16 Embedded Value (EV) was Rs. 13,939cr, comprising of Adjusted Net worth of Rs. 5,514cr and Value in Force of Existing business at Rs. 8,426cr. Since insurance is a long-term contract the cash inflow happens over multiple years, while a large part of the expenses occurs in the initial stage. So, Value in force is the value of future cash flows of all the policy in existence, discounted at Risk Free Rate.

Scope for improving VNB margin: The ability to growth new business premium (APE) and improve the margins on that, is another critical factor for valuing an insurance company, the resultant of which is called Value of New Business (VNB). I-Pru has been able to improve its net new business margins from 5.7% of the premium in FY15 to 8% in FY16. The margins are still low compared to others but what gives confidence is the increasing trend. While the APE grew by 9% in FY16 to Rs. 5,170, the VNB grew by 52.6% to Rs. 412cr, largely due to improved margins (backed by increasing business from pure protection plans). Further, assuming acquisition cost were reduced by 30% as per the management the VNB would have been Rs. 710cr for FY16.

Higher stickiness of clients & funds attracts high valuation for insurance companies: Customer stickiness in insurance business is normally higher than other financial services & hence the profitability is also high vis a vi others like AMC business. Another key positive what we observed is the ability to generate higher profit on a given AUM by insurance companies. On an AUM of Rs. 1.1 trillion, ICICI Prudential reported a PAT of Rs. 1,653cr in FY16.

The last deal of ICICI Prudential was done valuing the company at Rs. 32,500cr: ICICI Prudential had sold a 6% stake in Nov 2015, for Rs. 1,950cr, valuing the company at Rs. 32,500cr. While the IPO values the company at Rs. 47,870cr at the upper price band. While part of the rise in valuation can be due to the fact that the company has improved its persistency rates and the new business margins a lot could be attributed to expected future growth.

Valuations & View: At the price of band of Rs. 300-334 the issue is offered at 3.1x and 3.4x its reported FY16 EV. While the company has enough scope for business growth in the future, we believe the issue is fully priced in and hence we have a NEUTRAL rating on the issue.

Shares of ICICI BANK LTD. was last trading in BSE at Rs.267.55 as compared to the previous close of Rs. 270.65. The total number of shares traded during the day was 1811766 in over 9935 trades.

The stock hit an intraday high of Rs. 275.6 and intraday low of 266.4. The net turnover during the day was Rs. 489688594.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Views on Axis Banks Ltd 3QFY2017 Results: Angel Broking
Views on Yes Bank Limited 3QFY2017 Results: Angel Broking
Power Sector - Results Preview - Higher Fuel Cost & Muted Demand Growth to Impact Profitability - Reliance Securities
DCB Bank - 3QFY17 Result Update -BUY- Strong Core Earnings, Stable Asset Quality - Reliance Securities
Housing Finance Companies with retail focus will continue to see strong growth: Angel Broking
Pharmaceutical - Results Preview - Mixed Performance in the US Biz; Domestic Biz to See Moderate Growth - Reliance Securities
Cyient - Result Update - BUY- Soft as Expected, Order Book Healthy - Reliance Securities
TCS - 3QFY17 Result Update - REDUCE - Good Quarter, but Top-level Rejig a Headwind - Reliance Securities
Views on Infosys Ltd 3QFY2017 Results: Angel Broking
Bajaj Corp - Result Update - BUY - Decent Performance; Recovery in Sight - Reliance Securities
Infosys - 3QFY17 Result Update - BUY - Encouraging Performance, BFSI Strength Enthuses - Reliance Securities
Views on Tata Consultancy Services Limited 3QFY2017 Results: Angel Broking
CPSE ETF Note - Further Fund Offer of CPSE ETF - Reliance Securities
Capital Goods - Thematic Report - Imminent Capex Visibility in T&D Space to Aid Key Segmental Players - Reliance Securities
FMCG - Results Preview - Demonetisation Steals the Show...Literally! - Reliance Securities
IndusInd Bank - Result Update - BUY - Stellar Performance Continues ... Reiterate BUY - Reliance Securities
Cement Monthly Sector Update - Realizations Softened on Insipid Demand - Reliance Securities
Jubilant FoodWorks - Initiating Coverage - BUY Risk Reward Ratio Turning Favourable despite Near-term Uncertainties - Reliance Securities
Cyient - Initiating Coverage - BUY - Engineered for Growth - Reliance Securities
Aurobindo Pharma - Event Update - BUY - Generis acquisition to boost margin - Reliance Securities
Initiating Coverage - KEI Industries: Angel Broking
L&T Construction Wins Orders Valued Rs. 3039 Crores
TCS (TCS IN) - Revenue growth way below street expectation - Cholamandalam Securities
Infosys (INFO IN) - Result in-line with street expectation; guidance disappoints - Cholamandalam Securities
BUY Dishman Pharma - Better traction expected from CRAMS and disinfectants: AnandRathi Institutional Research
ICICI Prudential Life Insurance Company Ltd - IPO Note - Religare
ICICI Prudential Life Insurance Co. Ltd. - Pure play on life insurance - Geojit BNP Paribas
Fiberweb India Ltd - Set to grow at a rapid pace; initiate with BUY - BOB Capital Markets Ltd
BUY Bajaj Electricals - Growth momentum in all divisions expected in 2HFY17: AnandRathi Institutional Equity
Majesco Ltd - Well-placed to Leverage Conducive Industry Tailwinds - Reliance Securities
HCL Technologies - Event Update - Automation Focus a Key Differentiator - Reliance Securities
Aurobindo Pharma - 1QFY2017 Result Update - Angel Broking
HOLD India Cements - Subdued quarter; prices to recover: AnandRathi Institutional Research
Cement - 1QFY17 Results Review - Robust performance continues on cost benefits - Reliance Securities
NTPC 1QFY17: Result Review - In line with our expectations - Maintain BUY - Reliance Securities
KNR Constructions - 1QFY2017 Result Update - Angel Broking
BUY NRB Bearings - Margin expansion in Q1 leads to robust profitability: AnandRathi Institutional Reserach
BUY AIA Engineering - Margins likely to hold: AnandRathi Institutional Reserach
BUY Vivimed Labs - Better pharma growth, lower interest cost drive earning - Anand Rathi
Radico Khaitan - 1QFY2017 Result Update - Angel Broking
BUY KNR Constructions - Strong beginning, move toward a high-growth trajectory; AnandRathi Institutional Research
Dishman Pharmaceuticals - 1QFY2017 Result Update - Angel Broking
BUY Ahluwalia Contracts India - Steady growth intact: AnandRathi Institutional Research
BUY JK Lakshmi Cement - Strong start; growth set to endure: AnandRathi Institutional Research
Ahluwalia Contracts India Ltd - 1QFY17 Result Update - BUY - Healthy Performance Continues - Reliance Securities
Sun Pharmaceuticals - 1QFY2017 Result Update - Angel Broking
BUY MRF - Outstripping yet again: Anand Rathi Institutional Research
Bajaj Electricals - 1QFY2017 Result Update - Angel Broking
Lupin - 1QFY2017 Result Update - Angel Broking
Cadila Healthcare - 1QFY2017 Result Update - Angel Broking


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2016