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(This page tries to consolidate opinion, IPO Analysis , IPO Note and recommendation of brokers, Analysts, Business New papers, Management views  etc on the ICICI Prudential Life Insurance Limited  IPO and shall be updated continuously till the closure of IPO. Thus can  help investors to decide whether they should subscribe to ICICI Prudential Life Insurance IPO issue or not)

Related Post: ICICI Pru Life IPO: Detailed Analysis

Even as ICICI Prudential Life Insurance IPO got good overall subscription, its GMP (grey market premium tumbled to around Rs. 10/- on Day3 & was further down after close of IPO issue. However a day after issue close GMP is back to 14-15 level. As IPO has been subscribed about .84 times, all Retail applicants  stand to get a minimum of 44 shares.

Subscription: ICICI Prudential Life Insurance IPO ( x times)
QIB NII Retail Shareholders Total
Day 3  11.83  28.55 1.4  12.2  10.48
Day 2  .59  .15  .65  .48  .52
Day 1 0.058 0.044 0.249 0.201 0.16

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Retail will get full allotment of minimum 44 shares as application wise issue is only .8x subscribed & not likely to reach full subscription application wise. 

Important : ICICI Prudential Life Insurance IPO is to witness electric action in next few hours from HNIs & QIB . Will be subscribed many times. Retail if not applied may join as at some brokers the bidding goes till late night. going for heavy subscription

CAUTION & Important Comments (20/9/16):  As stock markets turned cautious on Day 2 of the IPO ahead of the big event tomorrow, the grey market buyers at GMP / Kostak seems to have vanished. The issue is said to have gathered about 5 lakh applications from retail today at the end of Day 2 & subscription levels are about . 65 x for retail, .48 x for shareholders  & .52X overall which appear to be on the lower side. There is little doubt that the IPO has been priced Rs. 10-20  more by management to extract mileage from market conditions and also influenced by high valuation of HDFC Life- Max deal and this poses a risk to those looking purely for listing gains.  A good amount of interest should come from QIBs tomorrow towards the end & hopefully HNI’s too. While bidding for IPO at brokers could well extend upto midnight seeing the Issue size, ICICI shareholders bidding could close by 4 p.m. The Lead managers should  have learnt a lesson from Yes bank fiasco.  In place of keeping a lower rate, they reacted instead by keeping a wide price band (300-334). Possibility of issue not sailing through looks less but any such fear could rattle the investors and market as well. My own opinion is that barring any major loss of faith or external development tomorrow, the IPO should sail through but the subscriptions levels if not high enough will impact its listing price.

Consolidated views of Brokerages / Analysts / Business News papers

Nirmal Bang: “With a market share of 21.9% on RWRP basis and assets under management (AUM) of Rs. 1.09 trillion, ICICI Prudential Life Insurance Co. Ltd. is the leading private player in the Indian Life Insurance segment. ICICI PLI has paid dividend per share of Rs. 8.4 for FY16 with a dividend yield of 2.44% at upper price band. At upper price band of Rs. 334, ICICI will have a post issue market cap of Rs. 47,940 Cr and is offered at 3.4 times embedded value at the end of FY16 and  P/E of 35.6x on in its FY16 diluted EPS. Considering the recently announced merger of Max life with HDFC life, the valuation looks reasonable. Recommend subscribing to the issue.”

RELIANCE SECURITIES: ICICI Pru Life has delivered strong growth in total premium and new business premium in last 3 years with healthy ROE in excess of 30%. It is focusing on increasing shareholders return through sustained growth in value of new business. At higher price band of Rs 334, the issue is priced at 3.4x price to embedded value which, in our view, is reasonable compared to recent deal of HDFC Standard Life & Max Life. We expect ICICI Pru Life to deliver strong performance, going forward on the backdrop of lower insurance penetration in India. Recommend SUBSCRIBE to IPO as it in our view, the Issue provides healthy investment opportunity for the long-term investors.”

KOTAK INSTITUTIONAL RESEARCH: “Expects  ICICI Prudential Life Insurance to deliver high (20%) APE (annualised premium equivalent) growth in the medium-term even as its return on EV will likely remain moderate at about 16%. Shift to higher margin (protection) business and higher investment variance can provide upside though constrained by high overruns and limited scope of upside on the persistency experience.”

Prabhudas Liladhar: “ICICI Prudential Life Insurance Co (IPLIC) is the largest private insurer with 10% market share on APE basis and manages Rs1.04 trillion of AUM. The company is riding on ULIP business (82% mix) which has lower regulatory risk, lower capital requirement and long term opex benefit, but also has lower margins and is highly dependent on capital market performance. Company from here on is focusing to improve it protection business share which is high margin and moderate opex. Hence, we believe RoEV could improve to 18‐19% in medium term from 15% currently and improve post over‐run margins to ~11% by FY18 from 8% currently. At the upper band of Rs334, the company would trade at 2.43x Sep‐18 EV which we believe is fully priced and hence we recommend to Subscribe for long term gains.”

Motilal Oswal: “Underpenetrated market and favorable demographics, Improvement in profitability and healthy solvency ratio of ~320% is leading to strong dividend payout. IPRU has a stated policy of 40% dividend payout ratio; over and above that, the board also announces special dividend,Significant improvement in persistency and cost ratios,Private players regaining market share bodes well for ICICI Prudential Life Insurance”

Jainam Wealth : “recommends  to “SUBSCRIBE” to the ICICI Prudential Life Insurance Company Ltd IPO considering the leadership position among private sector life insurance companies, lowest expense ratio of 14.6%, diversify multi-channel distribution network with 124155 individual agents & 4500 branches and strong solvency ratio of 320.5% at June 30, 2016 compared to the IRDAI- prescribed level of 150.0%”

Elara Capital:  “ICICI Pru Life Is A High Growth Company”

Centrum Wealth: ” ICICI Pru’s valuations appear attractive when compared to 4.1 times of Max Financial Services’ embedded value.  ICICI Pru will be able to attract adequate investor interest considering the healthy financials, return ratios of over 30 percent return on equity (RoE) and one of the highest solvency ratio of 320 percent. “The company’s operational strategies and focus on digital sales are expected to aid business growth going ahead. Hence, investors can subscribe to the issue. However,ICICI Pru’s key risks include higher competition affecting business growth; any termination adverse change in relationships with/performance of bancassurance partners may affect business and financial condition and changes in the regulatory environment.

Geojit BNP Paribas: “Suggests subscribing to the issue with a view that untapped opportunity and penetration in life insurance provides ample scope for the company to grow its portfolio at a rapid pace. “At the upper price band of Rs 334 per share, the IPO is priced at 3.4x FY16 P/EV which is favourable as compared to the valuation of recent insurance deal between HDFC Life and Max Life. The transaction valued HDFC Life at 4.5x FY16 P/EV and Max Life at 3.7x. Hence, valuation is reasonable”

Anand Rathi: “Rating: Subscribe ; ICIC Prudential Life Insurance  is a good investment opportunity in a sector that is opening up for retail participation.Although it is demanding a premium valuation, the IPO is attractive given the growth prospects of the life insurance industry in India, the company’s leadership position in the private life insurance space and its cost efficiency.

Hindu Business Line : “ICICI Prudential Life Insurance: A good entry point for investors”

R. Sreesankar,( co-head of institutional equities at Prabhudas Lilladher Pvt. Ltd) : “It is a good firm, but valuations are stretched. We are rating it as a subscribe, as on the positive side, it is a good long-term bet because the potential for insurance is going to continue to hold good for a long time”

Ajcon Global: “Subscribe to the issue. ICIC Prudential Life Insurance has high persistency ratio, sustainable business model, strong solvency ratio of over 300%, healthy dividend payment track record and significant under penetration of insurance. Considering the multiple for HDFC Life-Max Life merger, there is a potential upside to the issue price of Rs 334 at the upper end of the price band. “

Analyst at SPTulsian.com : ” IPO is expensive and can be skipped”

वेव्स स्ट्रैटजी के डायरेक्टर आशीष कयाल :  आईसीआईसीआई प्रूंडेशियल के आईपीओ में खरीदारी करनी चाहिए। कंपनी का मैनेजमेंट और बिजनेस काफी मजबूत है। कंपनी 1 लाख करोड़ से ज्यादा एसेट को मैनेज करती है। भविष्य में आईसीआईसीआई प्रूंडेशियल के आईपीओ में निवेश से अच्छा रिटर्न मिल सकता है।
क्रिस रिसर्च के डायरेक्टर अरुण केजरीवाल: आईसीआईसीआई प्रूंडेशियल में अच्छा रिटर्न मिलने की उम्मीद है। आईपीओ का साइज बड़ा है इसलिए अधिकतर निवेशक को आईपीओ में हिस्सा मिलने की पूरी उम्मीद है। आईपीओ में कम से कम 6 महीने तक होल्डिंग करने की सलाह है। इसमें 20-25 फीसदी तक का रिटर्न मिल सकता है। अगर पहले रिटर्न अच्छा मिलता है तो पहले भी बेच सकते हैं। अगर रिटर्न नहीं मिलता तो कम से कम 6 महीने तक होल्ड करें।
कैपिटल सिंडिकेट में पार्टनर सुब्रहमणयम पशुपति : रिटेल निवेशको को आईसीआईसीआई प्रूंडेशियल के आईपीओ से दूर रहना चाहिए। क्योंकि अभी तक इसकी वैल्यूएशन पूरी तरह से तय नहीं है। इससे अच्छा तो आप आईसीआईसीआई बैंक के स्टॉक में निवेश करें तो ज्यादा रिटर्न मिलेगा।

Quant Capital: ” The brokerage has assigned a ‘subscribe’ rating to the IPO. ICICI Prudential’s healthy business momentum and rising penetration in the insurance sector, besides reasonable valuations are some of the factors behind its rating. At the upper end of the price band, ICICI Prudential Life Insurance is valued at Rs 47,720 crore, quoting at 9.6 times risk-weighted received premium (RWRP) for FY16, which is quite low compared with our estimate of 15 times for ICICI Bank’s SOTP valuation. The valuation is also reasonable considering the recent merger of Max Life with HDFC Life has quoted the value for HDFC Life Insurance at Rs 47,000 crore with market share of 7.6 per cent against ICICI Pru Life’s share of 11.3 per cent. “

IIFL Private Wealth Management: ” ICICI Prudential Life Insurance has a strong capital position with a solvency ratio of 320.5 per cent at the end of June, compared with regulatory requirement of 150 per cent. In addition, the insurer has reported return on equity  in excess of 30 per cent for each year since FY12. ICICI Prudential Life Insurance persistency ratios have been increasing in recent years and its expense ratio is one of the lowest among the private sector life insurers. I-Pru Life’s value of new business (VBN) grew by robust 52.6 per cent in FY16 on account of improvement in persistency ratios and product mix. VNB margin also increased to 8 per cent, which partially led to EV Operating profit increasing by 17 per cent YoY in FY16. IIFL  has no recommendation on the issue.”

NVS Wealth Managers: “ICICI Pru Life’s claim-settlement ratio at 96.2 per cent is the highest in the private life insurance space. Max Financial Services and HDFC Standard Life’s claim settlement ratio as on March 31 stood at 94 per cent and 90.5 per cent, respectively. The untapped opportunity and penetration in life insurance provides ample scope for the company to grow its portfolio at a rapid pace. Considering the likely increased earnings based on the current financial year 2017 as well as addition to the net worth and increased book value, the pricing could become more attractive. Hence, we are confident that the insurer will deliver consistent performance and provide an excellent investment opportunity for investors with a long term horizon”

SMC Global: “The company offers its customers access to company’s products and services through an extensive multi-channel sales network across India, including through the branches of bank partners, individual agents, corporate agents, employees, offices and website. Every fiscal year since fiscal 2002, it has consistently generated the most new business premiums on a retail weighted received premium basis among all private sector life insurers in India. This being the first mover IPO from the private sector life insurance company, it is expected to issue will get lot of attention in the market. One may consider for long term investment.”

Capital Market : Rating 49/100 ; The company fares well on most financial, operational and valuation parameters compared to Max Life (which is part of listed Max Financial Services) and which is planned to be merged with HDFC Standard Life. Upon the completion of merger, the combined HDFC and Max life can command a higher market share than ICICI Prudential Life. For retail investors, insurance is a totally new industry and its financial and operational parameters will be too technical for most of them to understand and appreciate. Institutions, especially FIIs, will largely determine the company’s fortunes on the bourses after listing

HDFC Securities: has not given specific recommendation in line with its policy but has given a +ve coverage on the IPO. It has noted that ICICI Prudential Life Insurance has delivered consistent Leadership across business cycles. It has a range of Customer centric product portfolio, Diversified Multi-channel Distribution Network, Leveraging technology and has a Robust and Sustainable Business Model and it expects it to continue to deliver r superior customer value going forward.

Angel Broking: “At the price of band of `300-334 the issue is offered at 3.1xand 3.4x its reported FY16 EV. While the company has enough scope for business growth in the future. The issue is fully priced in and hence so a NEUTRAL rating on the issue”

SPA Research: “Positive on the prospects of the company given above industry growth in premiums, diverse presence across all business verticals, customer focused approach, pan India presence, strong persistency & claim settlement ratio and parentage & brand equity of the promoter. At the issue price, the stock is valued at 2.8x FY18E Embedded Value (considering RoEV of 10%) which is on the lower side considering the recent HDFCMax Life merger, which happened at 3.1-3.4x FY18E EV. There is further scope for improvement in RoEV due to shift to higher margin non-linked business and higher investment variance. We recommend investors to SUBSCRIBE to the issue for long term gains. “

Dalal Street Journal:  “The company does not have any listed peers as of now. The company with EPS of 11.54 with upper band P/E of 28.94x looks attractive. The company has solvency and persistency ratio of 320 per cent and 82 per cent respectively in FY16. The company maintains RoNW above 31 per cent since FY14. Considering good financial numbers, we suggest to subscribe for this IPO”

Hem Securities : “Company is bringing the issue at p/e multiple of 27-30 on post issue Q1FY17 annualized eps of Rs 11.28. At upper band, co is trading at P/EV multiple of 3.4x which is lower than its peer. Hence, looking after strong fundamentals, established & well known brand & strong parentage, co is looking attractive destination to deploy the funds in. Hence, we recommend Subscribeon issue.”

Navbharat Times: ICICI प्रू का शेयर महंगा है, लेकिन ग्रोथ भी जोरदार है

Nomura:  “ICICI Prudential has the highest proportion of revenue coming from unit-linked insurance plans (Ulips) and they account for 82% of its new business premium and this leads to lower margins. The brokerage feels that ICICI Pru Life IPO is  valued at a 10-20% discount to the HDFC-Max combine based on its embedded value.”

ET Intelligence Group: “The initial public offer (IPO) of ICICI Prudential Life Insurance Company offers a good investment opportunity in a sector that is opening up for retail participation.Along with the growth prospects of the life insurance industry in India, ICICI Pru’s strong brand W franchise, leadership among the private life insurance players, and cost efficiency make the issue attractive even though it demands premium valuation.  The IPO values the company at Rs 47,880 crore, at the upper end of the price band. This implies a price to embedded value (EV) -an industry term which represents the present value of future profits from assets after adjusting for risks -multiple of 3.4 times the FY16 EV of Rs 13,939 crore. The valuation is 47% higher than the last stake sale of 6% to Premji Invest and Temasek in November 2015. However, compared to the multiple commanded by the share swap agreement between HDFC Life and Max life .”

Anchor List :

Ahead of its  IPO issue , ICICI Prudential Life Insurance has  allotted shares worth Rs. 1,635 crore to a clutch of select investors from India and abroad, including the Singapore government, Nomura and a pension trust for Boeing employees and many mutual funds

Name of the Anchor Investor No. of Equity % of Anchor Bid price (Rs.)
Shares allocated Investor Portion
1 GOVERNMENT OF SINGAPORE 43,64,712 8.90% 334
2 NOMURA INDIA INVESTMENT FUND 24,08,736 4.90% 334
3 MONETARY AUTHORITY OF SINGAPORE 16,51,716 3.40% 334
4 NATIONAL PENSION SERVICE MANAGED BY OAKTREE CAPITAL MANAGEMENT L P 2,26,820 0.50% 334
5 THE BOEING COMPANY EMPLOYEE Retirement plans 1,49,732 0.30% 334
6 RUSSELL INVESTMENT COMPANY, RUSSELL EMERGING MARKETS FUND MANAGED BY OAKTREE CAPITAL MANAGEMENT, L.P. 4,19,012 0.90%
7 RUSSELL INVESTMENT COMPANY II PLC, – RUSSELL EMERGING MARKETS EXTENDED OPPORTUNITIES FUND -OAKTREE CAPITAL MANAGEMENT L P 149732 0.30% 334
8 Russel 691724 1.40%
9 OAKTREE EMERGING MARKETS 2,21,276 0.50% 334
10 PGGM WORLD EQUITY II B. V. 10,12,220 2.10% 334
11 OAKTREE EMERGING MARKETS 1,49,732 0.30% 334
12 NATIONAL WESTMINSTER BANK PLC AS TRUSTEE OF THE JUPITER INDIA FUND 11,07,524 2.30% 334
13 JUPITER SOUTH ASIA INVESTMENT COMPANY LIMITED – SOUTH ASIA ACCESS FUND 2,99,420 0.60% 334
14 GOLDMAN SACHS (SINGAPORE} PTE 28,05,088 5.70% 334
15 MORGAN STANLEY MAURITIUS 62,11,348 12.70% 334
16 COPTHALL MAURITIUS INVESTMENT 3,94,724 0.80% 334
17 INTEGRATED CORE STRATEGIES ASIA PTE LTD 12,02,168 2.50% 334
18 NOMURA SINGAPORE LIMITED 12,02,256 2.50% 334
19 DSP BLACKROCK TOP 100 EQUITY FUND 4,49,108 0.90% 334
20 CHENNAI 2007 24,08,736 4.90% 334
21 GMO EMERGING DOMESTIC OOPurtunites Fund 20,04,200 4.10% 334
22 GMO EMERGING MARKETS FUND, A SERIES OF GMO TRUST 4,04,536 0.80% 334
23 HDFC STANDARD LIFE INSURANCE COMPANY LIMITED 9,97,040 2.00% 334
24 ROCHDALE EMERGING MARKETS- 10,06,236 2.10% 334
25 LEGG MASON WESTERN ASSET ASIAN ENTERPRISE TRUST 2,99,977 0.60% 334
26 LEGG MASON WESTERN ASSET SOUTHEAST ASIA SPECIAL SITUATIONS TRUST 3,05,404 0.60% 334
27 WASATCH GLOBAL OPPORTUNITIES Fund 2,51,020 0.50% 334
28 WASATCH GLOBAL OPPORTUNITIES 1,49,732 0.30% 334
29 UTI TRUSTEE CO. LTD 28,44,336 1.80% 334
30 SBI TRUSTEE CO. LTD 26,94,648 5.50% 334
31 BIRLA SUN LIFE TRUSTEE COMPANY 26,94,648 5.50% 334
32 LEtT MUTUAL FUND TRUSTEE LIMITED 23,95,228 4.90% 334
33 IDFC TRUSTEE CO. LTD 14,97,012 3.10% 334
34 KOTAK MAHINDRA TRUSTEE CO. LTD 14,97,012 3.10% 334
35 TATA TRUSTEE CO. LTD 8,98,216 1.80% 334
36 RELIANCE CAPITAL TRUSTEE CO. LTD 8,98,216 1.80% 334
37 SUNDARAM MUTUAL FUND 4,49,108 0.90% 334
38 EDELWEISS TRUSTEESHIP CO. LTD. 1,49,732 0.30% 334

 

Articles :

ICICI Prudential IPO a big milestone: IRDA chairman

An Investor’s Guide To The Insurance Sector: Parameters To Watch

ICICI Pru Life Insurance: ICICI Bank shareholders can apply twice

CHANDA KOCHHAR ON ICICI PRU IPO:

ICICI Pru Life listing gives opportunity to foreign players to invest in co.

Scope for foreign shareholding to go up to 49% from current 26%

Product mix is currently largely unit linked

Will be growing our life protection biz to meet huge protection gap in India

Life Ins biz has strongest multi-channel distribution, focused on cost efficiency

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