ICICI Lombard’s Q2 results have attracted mixed reactions from brokerages, with many analysts optimistic about the company’s growth prospects despite some near-term challenges. Here’s what the major brokerages are saying about ICICI Lombard:
HSBC: Buy, target price Rs 2280, sees 13% upside
HSBC has maintained its Buy rating on ICICI Lombard, with a target price of Rs 2280, reflecting a potential 13% upside. The company’s Q2 premium growth moderated but remained higher than the industry average, and the core-combined ratio improved on a year-on-year basis.
HSBC remains optimistic about the company’s medium-term earnings, despite the expectation of a slowdown in new vehicle sales, which could affect growth in the motor insurance segment. To offset this, ICICI Lombard is focusing on improving renewal rates, which the management believes will help alleviate some of the pressure from the slowdown in underlying assets.
Morgan Stanley: Overweight, target price Rs 2400, sees 19% upside
Morgan Stanley has an Overweight rating on ICICI Lombard, with a target price of Rs 2400, implying a 19% upside. The company’s Q2 results were in line with Morgan Stanley’s estimates but beat consensus expectations. While there are downside risks to premium growth, Morgan Stanley believes that consensus earnings are likely to get upgraded.
Morgan Stanley also noted that market share gains and an improvement in the combined ratio position ICICI Lombard well in a weak broad market. The recent correction in the stock offers an attractive entry point, according to the brokerage.
Jefferies: Buy, target price Rs 2600, sees 29% upside
Jefferies is the most bullish, maintaining a Buy rating on ICICI Lombard with a target price of Rs 2600, forecasting a 29% upside. The company’s Q2 performance was strong, with 20% year-on-year growth in premiums, partly driven by investment income.
However, the combined ratio (CoR) was impacted by catastrophic (CAT) events, which caused a 60 basis points year-on-year decline. Excluding these events, the CoR improved by 20 basis points to 102.6%. Jefferies expects ICICI Lombard to continue outperforming in the motor insurance segment, which saw 16% year-on-year growth, and in retail health, which grew 41% due to the launch of new products. The brokerage maintains a 17% compound annual growth rate (CAGR) in premiums over FY24-27E and expects the CoR to improve to 100% by FY27E.
The current market price (CMP) of ICICI Lombard is Rs 2,011.00.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Please consult a financial advisor before making any investment decisions.
