ICICI Securities issued a buy rating for ICICI Lombard General Insurance Company with a target price of Rs 2000. Analysts said that despite sectoral challenges, large companies are well placed to grow. The firm expects better underwriting results and higher investment income to help the stock reach this new target price.
Buy
ICICI Securities research report on ICICI Lombard General Insurance Company
Sectoral challenges, such as lower growth, lower pricing, competition and higher loss ratios, have persisted longer than expected in the Indian general insurance (GI) space. However, at the end of the day, there is no structural issue with the long-term story. With the recent regulatory overhaul, which lowers distribution costs, large incumbents like ICICI Lombard are better placed to capture the structural growth opportunity. Management commentary remains strong on motor (basis overall growth outlook and gain in renewal market share) as well as commercial lines.
Outlook
Maintain BUY with a revised TP of INR 2,000, based on a 28x (unchanged) FY28E EPS of INR 71.4 (~INR 69 earlier). The increase in earnings bake in the better underwriting results, considering expectations of a recovery in motor TP loss ratios to normalised levels and higher investment income (potential unlocking of NSE holding value, also partly in Q2).