ICICI Lombard nears 52-week high on Q3 beat, brokerages ‘cautiously optimistic’

ICICI Lombard reported net premium income of Rs 4,690 crore, beating market expectations of Rs 4,376 crore. Net profit was up by 22.4 percent from the year-ago period

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Shares of ICICI Lombard General Insurance rallied more than 5 percent on January 17 morning, as its third quarter combined ratio came in at 103.6 percent against estimates of 104 percent.

Combined ratio was 104.4 percent in the year-ago period and 103.9 percent in the September quarter. A measure of profitability, the combined ratio is the sum of incurred losses and operating expenses measured as a percentage of earned premiums. Lower combined ratio is good news for the company as well as investors.

At 9.50 am, ICICI Lombard General Insurance was quoting at Rs 1,417.80 on the National Stock Exchange, up by 3.7 percent from the previous close.  Earlier, it rose to Rs 1,473, closing in on 52-week high of Rs 1,492. Trading volumes at 1.8 million shares were significantly higher than 20-day average volume of around 494,644 shares.

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Speaking to CNBC-TV18, ICICI Lombard chief financial officer (CFO) said the company would try and get to a combined ratio of 102 percent by FY25.

On the premium front, ICICI Lombard on January 16 reported net premium income of Rs 4,690 crore, beating market expectations of Rs 4,376 crore. Net profit was up by 22.4 percent from Rs 353 crore recorded in the year-ago period. The net profit of Rs 431 crore, however, was below market expectations of Rs 503 crore.

Also Read: HDFC Bank shares slump 5% after Q3 results disappoint investors

Total income of the insurer came in at Rs 5,003 crore, up from Rs 4,362 crore in the corresponding quarter. Claims ratio came in at 70 percent for the quarter versus 70.7 percent in Q2 FY24.

“Activity in motor and health seems to be buzzing. We will look for profitable growth in motor segment. Combined ratio for motor for the industry has improved by 4 percent,” Balachandran said.

Brokerage views

Morgan Stanley said ICICI Lombard’s net profit missed its estimates by 2 percent and consensus by 10-15 percent as company booked much lower capital gains.

However, as underwriting loss was lower than estimates and management has maintained combined ratio guidance, it has given some confidence to the broking firm. Morgan Stanley has “overweight” call on the stock with target at Rs 1,750.

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Nuvama Institutional Equities said that management indicated early signs of competitive intensity easing and growth returning to business.

“We are revising down FY25E/26E adjusted net profit by (2.9)/(1.3) percent, rolling over to FY26E, and assigning a slightly lower discount rate, which increases the target price to Rs 1,520 (from Rs 1,350). Maintain Hold,” it said.

Motilal Oswal Financial Services has reiterated its “buy” call with a target price of Rs 1,650.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.