Morgan Stanley has maintained its ‘Equal-weight’ rating on ICICI Prudential Life, setting a target price of ₹625, as the insurer’s Q1FY26 performance delivered a mixed bag with muted growth indicators and margin concerns.
The brokerage flagged several issues: muted Annual Premium Equivalent (APE) growth, weaker persistency ratios, a sharp decline in annuity APE, and margin compression at the product level. Despite a strong rise in protection premiums and disciplined cost control, these positives were offset by margin dynamics that disappointed.
ICICI Pru reported a Value of New Business (VNB) margin of 24.5%, which matched Morgan Stanley’s estimates. However, the firm pointed out that the margin did not expand meaningfully despite a higher mix of protection products, which typically carry better profitability. This has raised questions about product-level margins and pricing strategy.
Morgan Stanley forecasts APE and VNB growth of 8% each in FY26, with VNB growth accelerating to 13% in FY27. But despite the growth outlook, valuation multiples remain elevated. The stock currently trades at 15x FY27E Price/VNB and 1.6x Price/Embedded Value, which the brokerage believes is expensive for a company delivering a 13% Return on Embedded Value (RoEV).
As a result, Morgan Stanley prefers to remain cautious until growth visibility improves and product-level margin recovery is more visible. The outlook remains watchful as ICICI Prudential attempts to regain momentum in its annuity and long-term savings businesses
