Nirmal Bang has come out with its report on ICICI Lombard General Insurance Company , The research firm has recommended to “ Subscribe ” the IPO in its research report as on September 15, 2017
ICICI Lombard General Insurance Co. Ltd. (ILGI) is the largest private-sector non-life insurer in India based on gross direct premium income and company has maintained this position 2004. Company offers a comprehensive and well-diversified range of products, including motor, health, crop/weather, fire, personal accident, marine, engineering and liability insurance, through multiple distribution channels. The distribution channels are direct sales, individual agents, bank partners, other corporate agents, brokers, and online which help it to reach to customers in 618 out of 716 districts across India. Company was farmed as joint venture between ICICI Bank Limited and Fairfax Financial Holdings Limited.Valuation and Recommendation:
ICICI Lombard enjoy strong financial with operating profit CAGR growth of 21.8% and PAT CAGR growth of 16.1% between FY13 to FY17. Though the combined ratio (Loss Ratio + Expense Ratio) is higher among its private peers at 104% but because of higher return on investment with higher share of Equity investment, company was able generate ROE of 20% in FY17. Even the Combined Ratio has improved from 107.1% in FY16 to 104% in FY17 and further to 102.4% in Q1FY18. Though we do not have comparable listed peer of ICICI Lombard but as compared to other consumer facing NBFC peer like Bajaj Finance, Gruh Finance, ICICI prudential and PNB Housing finance the share is offered at lower valuation of PE of 41.2 and P/BV of 7.6 with ROE of 18.6% on training basis. We recommend to Subscribe with long term perspective considering the market opportunity, number one positioning and strong financial of company.
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