Nuvama has reiterated its ‘Buy’ rating on ICICI Lombard General Insurance, while reducing the target price to ₹2,100 from ₹2,400, following a subdued Q4FY25 performance. The stock closed at ₹1,832.00 in the previous trading session.
The brokerage highlighted that the company reported a 10.2% year-on-year growth in gross written premiums (GWP), which was considered soft due to a slowdown in new vehicle sales and deferred accounting of long-term insurance products.
On the profitability front, combined ratios (CoRs) rose 26 basis points YoY to 102.5%, although they improved 23 basis points QoQ. The deterioration in CoRs was driven by a sharp 298 basis points YoY and 578 basis points QoQ increase in the loss ratio, which climbed to 71.6%. However, this was partially offset by a decline in expense ratios, which dropped 272 basis points YoY and 601 basis points QoQ to 30.9%.
The company reported an underwriting loss of ₹2.1 billion, while after-tax profit (APAT) came in at ₹5.1 billion, marking a 1.9% YoY and 29.7% QoQ decline, attributed mainly to weaker investment income.
Despite the earnings pressure, Nuvama maintains a constructive long-term view, supported by the company’s focus on profitable growth. However, near-term performance will likely hinge on improvement in claims ratios and better investment returns.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.