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Global brokerage house Deutsche Bank has initiated coverage with hold rating on General Insurance Corporation of India and set a target price at Rs 830 per share, saying it is a leading Indian reinsurer but the risk-reward is balanced.
"Positives are dominant 60 percent market share, improving financials and combined ratio at 100 percent while negatives are B2B model, tightening competition and investment income driving profits," the research house said.
It feels the competitive landscape is getting incrementally tighter as insurance regulator IRDAI allowed foreign reinsurers to open branches in India.
Deutsche Bank expects combined ratio to exhibit modest improvement hereon.
"We expect combined ratio of 99 percent and return on equity of 17-18 percent over FY18-20. We expect net written premium/net profit to grow at CAGR of 14/13 percent over FY18-20," the research house said.
Key crop business for the company can be volatile but is not concerned, according to Deutsche.
At 10:52 hours IST, the stock price was quoting at Rs 792.55, down Rs 2.55, or 0.32 percent on the BSE. After listing on October 25, it fell 13 percent from its issue price of Rs 912.
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