Brokerage sees 15% upside on ICICI Lombard; recommends ‘buy’ on better expense ratio; do you own?

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₹1,550, representing a 15 per cent increase over the stock's current market price hovering between ₹1,390- ₹1,400. The domestic brokerage firm said in its report that the insurer's expense ratio has improved to 29.7 per cent during the April-June quarter, ahead of analysts' estimates. Going ahead, the growth in the motor segment is likely to be back-ended, with the company waiting for the rationalization of pricing in the own damage (OD) segment.

In the health segment, the benefits of price hikes and improving efficiency of the agency channel should translate into better profitability, according to the brokerage. ‘’Synergy benefits from the Bharti AXA merger (technology related), scale benefits, and improvement in mix in the Health business (higher share of retail health) should help to improve the combined ratio and RoE over the next couple of years. The management continues to guide for better performance, and hence we keep our estimates unchanged for FY24/FY25.

We retain BUY with a TP of ₹1,550 (32x FY25E),'' said Motilal Oswal in its report. Shares of ICICI Lombard dropped 1.70 per cent to touch an intra day low of ₹1,387.60, setting 1.70 per cent lower at ₹1,391.60 apiece during the trading session on Wednesday. Earlier today, ICICI Lombard General Insurance had received a Goods and Services Tax (GST) show-cause notice, alleging a tax demand of ₹273.4 crore along with interest, the company informed the BSE.