homemarket Newsstocks NewsICICI Lombard shares rise over 7% on Q3 results, brokerages give 'overweight' to 'buy' call
ICICI Lombard shares rise over 7% on Q3 results, brokerages give 'overweight' to 'buy' call
ICICI Lombard Q3 results: On Tuesday, January 16, ICICI Lombard General Insurance reported a 22.4% year-on-year jump in net profit, reaching ₹431 crore for the third quarter.
ICICI Lombard General Insurance shares surged over 7% on Wednesday, January 17, following the company's Q3 financial results. On BSE, the shares rose to an intraday high of ₹1,475 apiece, registering 7.3% growth as compared to the previous close of ₹1,374.65 apiece.
As of 10:50 am, ICICI Lombard's stock was trading at ₹1,457.00, marking an increase of ₹82.35 or 5.99%.
On Tuesday, January 16, ICICI Lombard General Insurance reported a 22.4% year-on-year jump in net profit, reaching ₹431 crore for the third quarter ending December 31, 2023.
The Gross Direct Premium Income (GDPI) for the first nine months of FY24 amounted to ₹18,703 crore, reflecting a 16.5% increase compared to ₹16,048 crore in the same period of FY23.
This growth surpassed the industry average, which stood at 14.0%.
The combined ratio of ICICI Lombard stood at 103.7% for nine months of FY24 compared to 104.6% for nine months of FY23. Excluding the impact of CAT losses of ₹137 crore, the combined ratio was 102.6% in nine months of FY24.
The Return on Average Equity (ROAE) was 17.1% in nine months of FY24 compared to 18.1% in nine months of FY23.
What do brokerages say?
Morgan Stanley acknowledged the positive momentum but highlighted a deviation from its estimates, citing a 2% miss in ICICI Lombard's net profit.
Furthermore, the consensus fell short by 10-15%, primarily attributed to the company booking significantly lower capital gains.
Despite this, Morgan Stanley maintained an "Overweight" call on the stock. The target price is set at ₹1,750 per share.
The brokerage noted that the underwriting loss was lower than expected, signalling a robust core business.
However, the lower net profit, impacted by reduced capital gains, raises questions about the sustainability of this trend.
On the other hand, Motilal Oswal Financial Services maintained a bullish stance on ICICI Lombard, reiterating its "buy" call and assigning a target price of ₹1,650.
Comments from management
Gopal Balachandran, CFO & Chief Risk Officer of ICICI Lombard, highlighted the positive momentum the company is experiencing across various segments.
He expressed confidence in sustaining a 100 basis points (bps) growth versus the industry average throughout FY24.
Balachandran specifically noted the vibrant activity in the motor and health segments, indicating a buzzing trend in these areas.
Emphasising the focus on profitable growth within the motor segment, he mentioned a 4% improvement in the combined ratio for the industry in motor, and shared ICICI Lombard's renewed interest and positive outlook in this category.
He projected a growth rate of 15-16% for the industry for FY25, expressing ICICI Lombard's aim to surpass this by 100-200 bps.
(Edited by : Amrita)
First Published: Jan 17, 2024 11:37 AM IST
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