ICICI Lombard share price plunged over 4% as the brokerage reduced target price

while writing, ICICI Lombardtraded at a share price of 1083.15 each below 47.40 or 1.2% on BSE. The stock was near its day’s low 1,080.80 each.

Also, the stock was just a few rupees away from its 52-week low. 1,049.10 each.

At the current market price the market cap of the company is approx. 53,197 crores.

In Q4FY23, ICICI Lombard reports net profit 436.96 crore, an increase of 39.82% as compared to the profit of Rs. 312.51 crore in the same quarter a year ago. It posted premium earned (net) 3,726.03 crore in Q4FY23 as compared to Rs. 3,317.78 crore in Q4FY22, growing over 12% YoY.

The company’s Return on Average Equity (ROAE) was 17.7% in FY2023 as against 14.7% in FY2022, while the ROAE was 17.2% in Q4 FY2023 as against 14.0% in Q4 FY2022.

Further, the company’s solvency ratio as on March 31, 2023 stood at 2.51x, as against 2.45x as on December 31, 2022, which was higher than the minimum regulatory requirement of 1.50x. The solvency ratio as on March 31, 2022 stood at 2.46x.

ICICI Lombard offers Final Dividend Of 5.50 per share for FY2023. Overall, in the financial year, the overall dividend of the company including the proposed final dividend was 10 per share.

“ICICI Lombard (ICICIGI) reported a satisfactory performance in Q4 FY2023 with a combined ratio (Cor) of 104.2%, in line with our estimates. 102 by FY25,” analysts at MK Global said in their note. Confirmation of %Cor guidance, notwithstanding the dynamic regulatory and insurance market environment, was majorly reassuring. Overall, Q4 marks a good end to a good FY23, with a CoR of 104.5% higher than the company’s own track record was even worse, though admirable amid the difficult outdoor conditions.

Looking ahead, Emkay’s note said, “will continue its strategy of growing above the market in selected business segments. Regulatory pressure with regard to tightening of reinsurance pricing and freeing up of pricing in commercial lines will continue to impact these segments.” There will be some impact on profitability.” , but management is confident of achieving its FY25 CoR guidance.”

On valuation, MK’s note said, “We reiterate our Buy rating on the stock, with our revised TP at Rs1,400/share (down from Rs1,490 due to higher cost of equity), for FY25E.” P/E of 27x. and P/B of 5x. Changing regulatory landscape in Motor OD, hyper-competitive market environment, and regulatory requirement of ~18% stake sale by promoter (ICICI Bank) hangs somewhat on the stock While regulatory clarity is emerging, any improvement in competitive intensity or any clarity on stake sale by ICICI Bank could be the next positive trigger for the stock.”

However, Emkay has cut target price on ICICI Lombard by 6 per cent.

Meanwhile, ICICI Direct in its note said, “CICI Lombard stock has been range-bound over the last 12 months. Leadership remains positive in a market with long-term growth potential. Steady market share augurs well with gradual improvement in combined ratio.” But to gain trust, sustainable delivery is awaited.”

Accordingly, ICICI Direct maintains its ‘Hold’ rating on the stock. It added, “We value ICICI Lombard at ~2.1x FY25E premium (50% weight), ~1.1x FY25E float (50% weight) and revise our target price to since 1300 1250/share.”

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