In an interview with CNBC-TV18, MD & CEO Vibha Padalkar said the company is internally optimistic and sees potential for further APE growth.
He also noted that APE growth has been strong in the first four months of FY25.
These are verbatim excerpts from the interview.
Q: Will there be an upward revision to that guidance for the full fiscal year 2025 from the stated target of 15%?
A: Given some fairly significant regulatory changes coming up, we stand by what we said. Internally, of course, we are aiming for a slightly higher figure, but we had said that 15% would be the upper limit for a full year.
Yes, it looks pretty good in terms of the first four months, and it’s over 30%, but let’s be honest, there was a base effect as well, so the numbers for us and everyone else look slightly higher on a two-year CAGR basis, it’s at around 25. So, it’s not that much different from where we’re saying 15%; internally we’re targeting a slightly higher number, but I’ll have a better view once the delivery charges and new regulations are implemented, and a lot of things will change. Right now, we just want to focus on the business.
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Q: 15% is the conservative opinion you would like to share at this point, but there is an internal upward or positive trend that you have. Is that correct?
A: I think so. If everything remains the same on the regulatory front, it will be effective on October 1st because then we can build a business model around it and, with very few changes afterwards, with the stability of the business models, yes, there should be a slight upward bias.
Q: In terms of the value of new business, that will also be a function of margins, but do you expect that to grow in parallel with APE growth? You’ve set a four-year target for that as well, but would that grow each year over the next four years in parallel with APE growth or could it outpace it?
A: It has become a way of life that you at least double the value of new business (VNB) every four years, regardless of the ups and downs, and there will be a very young sector, and there will be one thing or another that we have to look at from a business model change perspective. So nothing has changed. That is what we have been delivering in four-year cohorts and we will continue to deliver, again, doubling gross revenue and doubling VNB. So nothing has changed. So, whether it is 4 or 4.25 years, we are talking about 18%, between 17% and 18%; 17.5%-18.5%, that is a range that we have been delivering and that is what we are targeting internally.
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Q: In the conference call after the first quarter of FY25, you said that you expect the share of unit-linked insurance plans (ULIPs) to moderate. I assume that a major part of that moderation, as you suggest, will be due to the other product categories growing and having a higher share, and not due to the share of ULIPs going down, to a large extent. In that scenario, I would like to understand, by the end of this year, with other product categories growing and having a higher share, where do you expect the share of ULIPs to be relative to the end of FY24 and in terms of margins, if that translates, as per your understanding, to the share of ULIPs in your margins, where do you see them? Where do you see yourself at the end of FY25?
A: I don’t have to wait until the end of the year. We are already there. I am very happy to share that whatever we have said, ULIP has increased thanks to the marketplaces, it is already approaching a third of our business. Some of our channels are below 30%, so it has already been achieved. Our non-par, I am happy to share, is growing and in the first quarter it grew by approximately 41%. We have already started to prove that ULIPs are in a range that we are reasonably comfortable with.
For more details, see the attached video.
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