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:

Ultratech Cement - Q4FY17 Result Review - Kotak Securities Limited
HDFC Bank back on growth trajectory: Angel Broking
Sun Pharmaceutical US Update: Angel Broking
Global ambiguity sizzles; Base metals' rally fizzles: Angel Broking
Asset quality a negative surprise form Yes Bank: Angel Broking
Heavy weight banks look a good bet: Angel Broking
Banks: Tightening the screws - Kotak
Utilities: The supply glut - Kotak
Insurance: Ending a strong year on a stronger note - Kotak
TCS - Q4FY17 result review - Kotak
Views on Tata Consultancy Services Limited 4QFY2017 Results: Angel Broking
Strategy: Small need not be beautiful - Kotak
Indiabulls Real Estate restructures to create value: Angel Broking
Infosys Q4 2017 results - Dipen Shah, Sr. Vice President - PCG Research, Kotak Securities Limited
Views on Infosys Ltd 4QFY2017 Results: Angel Broking
Infosys - 4QFY2017 Result Preview: Angel Broking
Metals & Mining (Attractive): 4QFY17 preview-when it shines the most - Kotak
Energy: Weaker end to a subdued year - Kotak
Apex court disallows rise in imported coal tariff, though awards compensation for lack of domestic coal
Utilities: Supreme Court-denies compensation, but with a rider - Kotak
Strategy: The curious case of the Indian market - Kotak Institutional Equities
Economy: INR: Appreciate, for now, but be cautious - Kotak Institutional Equities
Energy: OMCs Refining - marketing - Kotak Institutional Equities
Cement: Earnings weakness persists - Kotak Institutional Equities
Fall in IT conglomerates evened out by Banking counters: Angel Broking
Shankara Building Products lists at a healthy premium to issue price: Angel Broking
USFDA action on Indoco Plants: Angel Broking
Karur Vysya Bank - Easing troubles to pave way for growth: Angel Broking
Navin Fluorine International - The unique chemistry of growth: Angel Broking
Dr Reddy's inks distribution pact with Integra Life Sciences: Angel Broking
BS-IV rollout expected be neutral on the automobile sector: Angel Broking
Shankara Building Products Ltd - IPO Note - Sushil Finance
'R' for RERA - for Realty coming to Reality soon: Angel Broking
Reliance Capital - Refurbishing core; monetisation crucial; company update; Buy - Edelweiss
D-Mart delights its investors: Angel Broking
Shankara Building Products Limited - Thrust on retail to boost potential: Angel Broking
Impact of Rupee Strength on IT and Pharma: Angel Broking
Idea Surges 12% on the back of positive news flows: Angel Broking
Sun Pharmaceutical - USFDA to Lift Import Alert Regulator to permit supply of products from Mohali: Angel Broking
IT Update - Ban on premium processing of H1-B visas: Angel Broking
Tech Mahindra - Acquires CJS Solutions in US: Angel Broking
Dr. Reddy's Laboratories - Gets USFDA observation for Duvvada oncology formulation Facility: Angel Broking
VIP Industries - Travelling smart on the luggage track: Angel Broking
Avenue Supermarts - IPO Note - Numero Uno! - Reliance Securities
IT Update: Ban on premium processing of H1-B visas: Angel Broking
DATA WARS BEGIN... AND THE WINNER IS: THE DATA CONSUMER: Angel Broking
Auto sector shifting gears, Feb volumes indicate fast recovery in sight: Angel Broking
Alembic Pharmaceutical launches Desvenlafaxine in US: Angel Broking
Sugar prices trading in tight range, may rise further on tight supplies: Angel Broking
REPCO Home Finance - Reaping the benefits of serving the underserved: Angel Broking


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

disclaimer copyright © 2005 - 2017