Reduce ICICI Lombard; target of Rs 2000: Emkay Global Financial

Reduce

Emkay Global Financial's research report on ICICI Lombard

ICICIGI reported a strong performance for Q3FY25, wherein GWP at Rs64.7bn (+0.6% YoY), impacted by the 1/n regulation, came in 0.9% lower than our estimate; however, combined ratio at 102.7% was significantly lower than our estimate of 103.9%, driving PAT of Rs7.2bn (+68% YoY) and beating our estimate by 12.4%. While quarterly PAT was impacted positively on account of implementation of the 1/n regulation, improvement in the combined ratio was largely driven by significant improvement in the claims ratio, aided by favorable reserving experience in the Motor TP segment. The management remains cautious in the Commercial and Group Health segments, given pricing pressure and increased competition.

Outlook

To bake in the Q3 and external developments, we reduce our GWP estimates by 2-4% and build in a slight improvement in CoR for FY25 and FY26, while increasing the FY27E CoR by 40bps. Resultantly, FY25- 26E PAT increases 2-4%, while FY27E PAT reduces 2.5%. We reiterate REDUCE and revise Dec-25E TP upward to Rs2,000, implying FY26E P/E of 33x.

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ICICI Lombard - 20012025 -emkay