ICICI Lombard gains on RBI nod to stake sale deadline extension

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March 13, 2023
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ICICI Lombard General Insurance | CMP: Rs 1,197.05 | The stock price fell over 4 percent after the general insurance player reported a mixed performance in the June 2022 quarter. Investors gave it a thumbs down as it missed the estimates. ICICI Lombard reported a 11 per cent rise in the net profit at Rs 353 crore in the third quarter of the ongoing fiscal, compared to a net profit of Rs 318 crore in the same quarter previous fiscal. Its profit before tax rose on similar lines to Rs 465 crore in Q3FY23, against Rs 421 in the year ago period.

The ICICI Lombard share price gained more than 3 percent on Monday after the Reserve Bank of India gave nod to the ICICI Bank request for extending the deadline for diluting its stake in the general insurer to less than 30 percent until September 9, 2024.

As of December 2022, ICICI Bank holds a 48.02 percent stake in ICICI Lombard General Insurance. Section 19(2) of the Banking Regulation Act limits a bank’s shareholding to 30 percent of a company’s capital, unless the company is a subsidiary of the bank.

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In September 2020, ICICI Bank was granted an exemption for a period of three years with respect to its shareholding above 30 percent in ICICI Lombard General Insurance Company and ICICI Prudential Life Insurance Company.

The exemption during its operation may permit both ICICI Lombard General Insurance Company and/or ICICI Prudential Life Insurance Company to consider strategic options such as mergers and acquisitions or capital raise which have the potential of reducing the bank’s shareholding, the company had said.

In September 2021, ICICI Lombard ceased to be a subsidiary of ICICI Bank after the bank reduced its stake from 52 percent to 48 percent.

At 10:53am, ICICI Lombard’s share price was trading up by 1.50 percent at Rs 1,091.25 and ICICI Bank was trading 1.23 percent higher at Rs 853. The Nifty Bank index was trading flat at 40,486.00 points, while the Nifty Financial Services was up 0.48 percent to 18,014.60 points.