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* NBP – NBP was at Rs34bn growing by 14% on YoY basis which was in line with our expectation. The performance was mainly supported by a sharp jump of 81% in single premium while First year premium registered a de‐growth of 27%.

* APE – APE at Rs16.6bn slightly lower than our estimate of Rs16.9bn. APE de‐grew by 18% yoy and grew by 13.7% qoq. The de‐growth was led mainly on back of 39% decline in ULIP.

* APE Mix – Share of Protection surged 233bps and Non‐linked savings business increased by 1477bps which was offset by decline of 1709bps in share of ULIPs.  

* VNB & VNB Margin – Q3FY21 VNB at Rs4.2bn was lower than our forecasts of Rs4.6bn, while VNB margin at 25.7% was lower than our estimates of 27.5%. On a yoy basis VNB margins expanded by 479bps, however saw a contraction of 168bps on sequential basis.

* Persistency improvement – Sequentially, persistency saw a decline across all time periods expect 37thMonth (where it remained flat). On a yoy basis only 25th month and 49th month persistency saw a marginal decline.

* Opex and commission ratios – Cost ratios have improved with commission ratios falling 96bps yoy whereas opex ratio improved by 161bps yoy to 7.8%  

* Profits ‐ PAT came at Rs3.04bn, remaining stable on YoY and QoQ basis.

* Channel Mix – Mix of other channel increased by 852bps on YoY basi, however saw a sharp decline of 1167bps in share of banca channel. On QoQ basis too, share of banca saw a decline.

* Change in forecasts – 9MFY21 APE is 67% of our FY21 estimates and 66% VNB share of our forecasts.  

* Valuations ‐ The stock currently trades at FY23E P/EV of 2.2x.  

* Our view: ICICI Pru Life Q3 FY21 results were weaker than our forecasts primarily on the back of higher share of ULIPs and a declining share of protection. We have cut our VNB margin assumption for future years by 50bps each but have raised our APE growth estimates given that ULIPs are making a strong comeback and the company is increasing its focus on the non‐par segment. Valuations at FY23E P/EV are attractive when compared with HDFC Life’s valuations of 4x. Furthermore, we expect ICICI Pru Life to return to premium growth from Q4 FY21. We expect the company to report a 20% and 14% VNB and EV CAGR during FY21E‐23E. Retain BUY with a target price of Rs562.