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Monday, September 19, 2016

ICICI Prudential Life Insurance Company Ltd. (IPLICL) IPO at a glance


Issue Highlights

Issue Period
19/9/2016-21/9/2016
Price Band (Rs.)
300-334
Issue Size(shares)
18,13,41,058
Issue Size (Rs. crore) #
6056.79
Issue Type
100% Book built
Face Value (Rs.)
10
Listing
BSE,NSE
Industry
Life Insurance
Registrar
Karvy Computershare
Minimum Bid Quantity
44 shares
Maximum Retail Subscription
Rs. 1,91,048 (13 lots)
BRLM
HSBC, IIFL,JM Fin, SBI cap, UBS
# derived figure

Issue Details

Offer for Sale by the promoter ICICI Bank:  18,13,41,058
Fresh Issue:   Nil
Equity Shares Outstanding Prior to the Issue:  1,43,53,24,010
Equity Shares Outstanding After The Issue :1,43,53,24,010

Objects of the Issue

This issue being a pure offer for sale by its promoters, company shall not receive any proceeds from the offer. This issue shall fetch listing benefits to the company besides enhancing its brand value and providing liquidity to the existing shareholders.

Industry Profile
The Indian insurance sector was estimated to be of  Rs. 3.7 trillion on a total premium basis for FY 2016, and it is ranked as the 10th largest insurance market in the world. India still remains an underpenetrated insurance market with a life insurance penetration of 2.7 % only.

Company Profile

The company enjoys the status of being largest private insurance player of India in total premium terms and AUM. It’s a joint venture between ICICI bank and Prudential Corporation Holdings Limited. IPLICL offers a range of life insurance, health insurance and pension products & services.
On RWRP basis company enjoys the market share of 11% among all insurance players (including public sector player) whereas among private sector players  its market share is 22 %.The company has a wholly owned subsidiary, ICICI Prudential Pension Funds Management Company Limited.

Risks & Threats

     (1)    Indian life insurance sector being highly competitive, makes it difficult to sustain the growth with a looming threat of consolidation of competitors . Presently, there are 24 competitors in the field including the public sector player- LIC-the market leader with the 48 % of the market share, and there exists a risk of consolidation of a few resulting in a bigger entity
     (2)    Around 59 % of company’s  unguaranteed AUM (Assets Under Management) are unit-linked and thus prone to market downturns. Though the burden of capital markets going down is borne by the policy holders but  these downturns negatively affects company’s profitability
     (3)    Around 14% of capital-protected AUM shall ensure a hole in company’s profitability in case of a market downturn
     (4)    Around 53 % of company’s investment being in debt instruments , fluctuating interest rates  are detrimental for its profitability
     (5)    Alike all insurance companies , it is prone to acts of God.
     (6)    Around 55 % of the total premium received comes from the 5 states viz. Maharashtra, Karnataka, Tamilnadu, Gujarat and Delhi and such geographic concentration has its drawbacks
     (7)    The growth in Indian insurance market is highly uncertain and the CAGR has been varied from 11 % to -5 %  in the past 9 years.


(   
Financial Profile #

Parameter
FY 16
PE Ratio
29.01
Price to Book
9.01
ROE (%)
31.05
PEG profit
6.44
Profit CAGR 4 years
4.5

# using upper end of the price-band

Acronyms used:
RWRP : Retail weighted Received Premium
 APE: Annualized Premium Equivalent



Friday, September 16, 2016

An update on latest IPO returns

This is how these latest IPOs performed:


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