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.
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.
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