It is difficult to analyse the performance of the insurance companies as the embedded value is a function of many assumptions…however we can always compare the performance of HDFC life and ICICI pru and use them as bench marks…
HDFC life is way better than icici life in terms of performance but HDFC is almost 2.5 times costlier on the basis of price to EV…other way of looking at it is that ICICI pru is undervalued…
HDFC will command that premium due to their excellent mgt and unique initiatives but we need to define that premium…for my calculation purpose i am keeping a 40% premium for HDFC life over icici life…so with HDFC life as a benchmark which has a PEV ratio of minimum 6-6.25, the ICICI should have a PEV of 3.75…to reach that PEV, the ICICI share should be valued at Rs. 491…
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