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ICICI Prudential Life Insurance Company Ltd - IPO Note - Religare

Posted On: 2016-09-18 20:03:02

ICICI Prudential Life Insurance Company Ltd (IPru), incorporated on July 2000, is a joint venture between ICICI Bank (68% stake) and UK's Prudential Corporation Holdings (22% stake). They offer their customers a range of life insurance, health insurance and pension products and services.

IPru is the largest private sector life insurer in India by total premium in FY16. It competes principally with other large life insurance companies in India, such LIC, HDFC Standard Life, SBI Life, Max Life and Kotak Mahindra Old Mutual Life.

Among all insurance companies in India (public and private sector), company has 11.3% market share on a retail weighted received premium basis. On a similar basis, Company's market share among the 23 private sector life insurance companies in India stood at 21.9%.

IPru has built a strong bancassurance channel by leveraging strategic relationship with controlling shareholder, ICICI Bank. They believe that they are at the forefront of leveraging technology in the Indian life insurance sector, with their focus on digitisation and transformation of sales, customer on-boarding and internal processes. Company has 121,016 individual agents and their bank partners have over 4,500 branches.

The Company also has a wholly owned subsidiary, ICICI Prudential Pension Funds Management Company Limited, which is registered as a fund manager with the Pensions Fund Regulatory and Development Authority of India.

Outlook and valuation:

IPru will be India's first insurer to hit the capital markets. Promoters, ICICI Bank will sell its 12.7% stake in the IPO, while Prudential will not dilute any of its holding. At the upper end of the price band, the IPO will raise Rs 6,057cr, making it the fifth largest IPO in the domestic market and biggest since Coal India's in 2010. In FY16, IPru's gross premium income was Rs 19,164cr, which comprised Rs 4,924cr of retail new business regular premium, Rs 432cr of retail new business single premium, Rs 11,995cr of retail renewal premium and Rs 1,813cr of group premium. Value of new business has gone up 52.6% YoY to Rs 412cr in FY16. Since FY02, it has consistently generated the most new business premium on a retail weighted received premium basis among all private sector insurers in India.

IPru has the highest proportion of revenue coming from Ulips (82% of its new business premium). Ulips are cyclical and so prone to volatility. Also, IPru's new business profit is lower than peers that have bank-led insurance models. Embedded Value (EV) of IPru is Rs 13,939cr. The only other listed player in life insurance space is Max Financial Services India with an EV of Rs 5,617cr (FY16). IPru 's valuations are at 3.1-3.4x FY16EV and Max's valuation stands at 2.9x FY16EV. However, post HDFCLife-Max merger, IPru's valuations are likely to be cheaper.

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

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