Motilal Oswal’s research report on ICICI Lombard: Read Report
ICICI Lombard’s fourth-quarter performance for FY24 was in line with expectations, with its net earned premium (NEP) reaching INR 44 billion, marking a 17% year-on-year increase. Investment income closely matched projections, albeit with a 3% surplus in the policyholders account and a 5% deficit in the shareholders account. The claims ratio for the quarter stood at 68.6%, down from 70.0% in the previous quarter, while the combined ratio improved to 102.2% from 103.6% in the same period, both aligning closely with estimates.
Profits After Tax (PAT) for the quarter experienced a notable 19% YoY growth, totaling INR 5.2 billion, surpassing estimates by 17%. For the fiscal year 2024, the PAT amounted to INR 19.2 billion, reflecting a 20% YoY growth from FY23’s INR 16 billion. The company has revised its combined ratio guidance downward to 101.5% for the exit rate of FY25, compared to the previous estimate of 102.
Looking ahead, ICICI Lombard anticipates a gradual resurgence in growth within the Motor segment, particularly contingent on pricing rationalization in the Own Damage (OD) segment. In the Health segment, improved profitability is expected from the implementation of price adjustments and enhancements in the efficiency of the agency channel. The company aims to leverage scale benefits, a favorable product mix with a higher proportion of retail health, and operational enhancements across channels to bolster its combined ratio and Return on Equity (RoE) over the next few years. Management remains optimistic about future performance and anticipates further combined ratio improvement by FY25.
The recommendation for investors remains a BUY rating on the stock with a target price of INR 2,100, based on a 35x FY26E EPS.
Disclaimer: The opinions and investment advice provided by investment experts, brokerage firms, or rating agencies on LegalParivar.com are solely their own and do not represent the views of the website or its management. LegalParivar.com encourages users to consult certified experts before making any investment decisions.
