Analysts maintain bullish calls on ICICI Pru Life on the back of a renewed business strategy

Mumbai: Shares of ICICI Prudential Life Insurance Co fell as much as 5% in Wednesday’s trading to their lowest levels in nearly one month after the private life insurer posted a drop in first quarter core business revenue. However, analysts remained hopeful of a recovery on the back of a renewed business strategy, and maintained their bullish calls on the stock. Some analysts even raised their price targets as they rolled-forward valuations.

ICICI Prudential settled at ₹559 on the NSE on Wednesday, down 2.74% from the previous close. More than 49 lakh ICICI Prudential shares exchanged hands on the BSE and NSE, twice the combined daily average volume for the last one month.

“We expect key parameters (recovery in APE growth, balanced product mix with NBM stabilising at higher levels) to change in favour of ICICI Pru Life and should help ICICI Pru Life to rerate upwards,” said JM Financial in a client note. The stock trades at a discount to its peers, implying re-rating on the stock to continue going ahead, the domestic brokerage said. Of the 24 analysts who reviewed the first quarter earnings, 17 of them have a ‘buy’ rating on the stock. Five of them remain ‘neutral’ while two of them recommended a ‘sell’ on the stock, showed a Bloomberg poll of analysts.

Consensus price targets of analysts rose nearly 5% to ₹638.3, Bloomberg data showed. The upward revision follows a near 20% jump in the company’s stock price in the last six months.

HSBC remains the most optimistic on the stock with a price target of ₹710. CLSA and other foreign brokerage houses like Morgan Stanley, Jefferies, Macquarie and BNP Paribas maintained their recommendations and price targets.

Morgan Stanley said the stock could give up some of its gains in the near-term after the strong rally. “Narrative (on future growth) was likely not what many investors were looking forward to,” said the US brokerage house.