Shares of ICICI Lombard General Insurance Company fell over 4 per cent in Wednesday's trade after an uninspiring March quarter results. Macquarie said visibility on underwriting and profitability remains poor and that questions have emerged on the structure on return on equity. This brokerage has a target of Rs 995 on the counter. A few other brokerages have Rs 1,200-1,400 price targets on the stock.
Nuvama Institutional Equities, which has price target of Rs 1,200, said competitive intensity remained elevated for ICICI Lombard. YES Securities, which has a target of Rs 1,245 on the stock, said there was nothing in the earnings that warrants an upgrade, as the brokerage maintained its 'ADD' rating on the stock.
ICICI Lombard shares fell 4.4 per cent to hit a low of Rs 1,080.80 on BSE.
Macquarie said the company continues to see heightened competitive intensity and irrational pricing in the motor segment and has deliberately slowed down growth, especially in the private car segment.
It said valuations at 4.6 times FY24 price to book value is expensive for current return on equity level of 16-17 per cent. "There is a overhang coming from requirement of ICICI Bank parent to sell stake from 48 per cent to 30 per cent by September 2024. Added to that the 15-year CEO tenure for the current CEO ends in May 2024," it added.
YES Securities said caution on the motor segment continued to drag overall premium growth lower. While Motor OD and Health loss ratios evolved positively, the benefit was more than offset by Motor TP and other segments, it said.
"While industry growth in motor has improved, heightened competitive intensity may persist, especially in the absence of commission caps beginning FY24. Reinvestment of synergy benefits is weighing on the business’s interim RoE profile," Nuvama said.
Emkay Global has revised its our revised target price on the stock to Rs 1,400 from Rs 1,490. The altering regulatory landscape, hyper competitive market environment in Motor OD, and regulatory requirement of 18 per cent stake sale by the promoter have been some of the overhangs on the stock, it said.
"While regulatory clarity is emerging, any improvement in competitive intensity or any clarity on the stake sale by ICICI Bank could be the next positive trigger for the stock," it said.
B&K Securities finds the stock worth Rs 1,275 against Rs 1,326 earlier.
Kotak Institutional Equities expects ICICI Lombard’s profitability to remain moderate at about 18-19 per cent RoE and 103 per cent combined ratio in FY2025E.
"Commercial lines will likely face headwinds in the near term due to the removal of standardised tariffs and higher reinsurance rates, though we believe that stabilisation of profitability in the motor business and gradual improvements in health will likely support moderate improvements. We retain ADD with an RGM-based FV of Rs 1,225 (rolled over from Rs 1,200). We continue to prefer life over non-life insurance players," it said. Motilal Oswal Securities has a target of Rs 1,400 on the stock.