Investec has upgraded ICICI Pru Life stock from ‘hold’ to ‘buy’ with a target price of ₹725, citing valuation comfort and the belief that majority of headwinds are behind the sector. The brokerage noted that challenges related to taxation, surrender value tweaks, and competition from unlisted players have largely settled, paving the way for a positive growth trajectory.
Key insights:
- ICICI Pru Life upgraded to ‘buy’ due to attractive valuations.
- Listed private life insurers are expected to deliver VNB (Value of New Business) growth of 13-16% over FY25E-FY28E.
- Current valuations imply VNB growth expectations of just 5-12% over the next 10 years, making the sector an attractive investment.
- Listed private life insurers have delivered a healthy return on capital (17-28%) over the past two decades.
Sector outlook:
Investec is optimistic about the life insurance sector, noting that the valuation comfort combined with stable growth expectations makes it a compelling investment opportunity. The brokerage highlighted the sector’s resilience and strategic adaptability amid changing regulatory dynamics.
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