Share price of ICICI Prudential Life Insurance Company has surged 8% in the last two days after parent company ICICI Bank announced divestment of a 1.5% equity stake in the firm.
Share price of ICICI Prudential Life Insurance Company has surged 8% in the last two days after parent company ICICI Bank announced divestment of a 1.5% equity stake in the firm. This has taken the stock price from a price of Rs 391 per share at the end of trading last week to Rs 421 apiece on Tuesday. ICICI Bank has now sold 2.15 crore equity shares of face value of Rs. 10 each, representing 1.50% of its equity share capital at the end of March this year. Interestingly the buyer, according to data available on the stock exchanges, is the Monetary Authority of Singapore at a price of Rs 391.6 per share.
ICICI Bank informed the stock exchanges that the 1.5% equity stake divestment through open markets helped the private sector lender raise Rs 840 crore. This is just days after the bank sold a 3.96% equity stake in ICICI Lombard for over Rs 2,200 crore. ICICI Bank had already informed investors, while announcing its March quarter results, that the bank would be looking to further improve its balance sheet as opportunities arise. With the sale of 2.15 crore equity shares, ICICI Bank’s shareholding in ICICI Prudential is now down to 51.4%.
Brokerage and research firm Motilal Oswal termed ICICI Prudential Life Insurance as a high conviction idea earlier this month. ICICI Prudential, according to Motilal Oswal, is continuing with its guidance of doubling VNB over 3-4 years, on the back of share of non-linked, protection/annuity segment rising, persistency trends stable, and improving productivity by focusing on enhancing distribution and bringing cost down. “We believe the Indian life insurance sector is in a sweet spot, where strong structural potential is now overlapping with the rising share of financial savings and higher disposable income. We, thus, expect Indian insurers to trade at a premium to global insurers,” it said.
While ICICI Prudential’s stock was up, ICICI Bank shares have slipped 2% in the same time frame. In the January-March quarter, ICICI Bank reported a 26% jump in standalone profit to Rs 1,221 crore, on-year basis. The private lender announced that non-performing assets declined to 5.53% from 6.70% in the last one year. Provisions stood at Rs 3,242 crore while coronavirus related provisions were Rs 2,725 crore. The provision coverage ratio on non-performing loans, including cumulative technical write-offs, was 86.8% at March 2020 compared to 80.7% in March 2019.