Buy ICICI Lombard; target of Rs 1600: Motilal Oswal

Motilal Oswal is bullish on ICICI Lombard recommended buy rating on the stock with a target price of Rs 1600 in its research report dated October 18, 2023.

Broker Research

October 20, 2023 / 15:24 IST

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Motilal Oswal's research report on ICICI Lombard

ICICI Lombard (ICICIGI)’s NEP came in 5% higher than our estimates at INR43b. It grew 12% YoY and 11% QoQ. Investment income from policyholders’ accounts came in 8.6% higher than our estimates at INR 7.4b in 2QFY24. Hence, higher-than-expected total income and in-line operating expenses led to lower-than-anticipated underwriting loss (INR1.4b loss vs. our estimate of INR 2.4b loss). The claims ratio came in at 70.7% vs. 74.1% QoQ. On YoY basis, loss ratios for motor OD and motor TP segments have declined sharply. Claims ratio for the quarter was better than our expectations. ICICIGI’s PAT grew 48% QoQ but declined 2% YoY to INR5.8b. PAT came in 27% higher than our estimates. For 1HFY24, NEP/PAT came in at INR129b/ INR 9.7b resulting in a YoY growth of 19%/3%. Management maintained its guidance of a high-teen growth in premium as well as combined ratio of 102% by FY25.

Outlook

We marginally raise our investment income estimates, leading to an EPS increase of 3.5%/4.4% for FY24/FY25. Reiterate BUY with a TP of INR1,600 (premised on 32x FY25E).

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