ICICI Lombard General Insurance dips 5% post June quarter earnings

The country's largest private sector general insurer reported 80 per cent YoY growth in net profit at Rs 349 crore in Q1FY23 on the back of a healthy growth in premium income.

Shares of ICICI Lombard General Insurance Company dipped 5 per cent to Rs 1,207 on the BSE in Wednesday’s intra-day trade in an otherwise firm market despite reporting healthy earnings in April-June quarter of FY23. The stock has corrected 7 per cent from its opening level of Rs 1,293. In comparison, the S&P BSE Sensex was up 1.4 per cent at 55,515 at 01:47 PM.

The country’s largest private sector general insurer reported 80 per cent year-on-year (YoY) growth in net profit at Rs 349 crore in Q1FY23 on the back of a healthy growth in premium income. In the year-ago period, its net profit was to the tune of Rs 194 crore.

The gross direct premium income by the insurer during the period was Rs 5,370 crore, up 28.2 per cent from the year-ago period. Underwriting losses of the insurer narrowed to Rs 193.28 crore in Q1FY23 from Rs 624.92 crore a year ago.  CLICK HERE FOR FULL REPORT

Analysts at HDFC Securities expect loss ratios in the health segment to normalise during the rest of FY23, while the brokerage firm also expect loss ratios in motor segment to improve on the back of a growth rebound. “We trim our FY23E/ FY24E earnings by 6 per cent/ 12 per cent to factor in management guidance on elevated opex ratios in the near term,” the brokerage firm said in its result update.

Given the stock’s sharp correction and strong demand outlook in motor insurance, analysts upgrade the stock to ADD (from REDUCE), with a target price of Rs 1,370 (implying a Mar-24E PE of 32x and a P/ABV of 5.4x).

Analysts at ICICI Securities believe long term sustainable growth opportunity, market leadership with diversified product mix and digital adoption provide a good opportunity to invest.

“Leadership in motor segment (especially in TP) to aid profitability. Investment in agency channel to aid growth in health segment. Gradual decline in combined ratio in medium term to aid returns. Investment in digital and distribution to strengthen business growth,” the brokerage firm said in result update. It maintains ‘Buy’ rating on the stock with a target price of Rs 1,550 per share.