ICICI Lombard share price jumped over 5% in early trade on Wednesday after the company reported strong earnings for the fourth quarter of FY24. ICICI Lombard shares gained as much as 5.27% to ₹1,736.00 apiece on the BSE. ICICI Lombard General Insurance Company posted a net profit of ₹519 crore in Q4FY24, registering a growth of 19% from ₹436 crore in the year-ago period.
The company’s net premium written in the March quarter increased 18% to ₹4,767 crore from ₹4,047 crore, year-on-year (YoY). Its solvency ratio also improved to 2.62% from 2.51% in the year-ago period. ICICI Lombard’s board of directors also recommended a final dividend of ₹6 per share. Kotak Institutional Equities believes ICICI Lombard has fared well due to a combination of a better pricing environment and better risk management.
“While near-term profitability improvement may be visible, we expect growth aggression to keep medium term profitability range bound. However, the motor sector has fewer moats, and hence the performance of even the best-performing player is not insulated when industry aggression increases; rich valuations encourage competition,” Kotak Institutional Equities said in a note. It believes while its premium valuations reflect superior performance, the scarcity premium (if any) may be at risk from listing of motor insurance peers.
The brokerage firm revised up its estimates by 3-4%, and retained a ‘Reduce’ call and raised ICICI Lombard share target price to ₹1,550 per share from ₹1,475 earlier. Nuvama Institutional Equities noted that the management of ICICI Lombard cited a much-improved competitive environment, and mildly improved its guidance to an exit CoR of 101.5% for FY25E. It believes the management is being cautious.
The broking firm revised its FY25E and FY26E APAT estimates by 3.4% and 3.9% and raised the ICICI Lombard share price target to ₹1,790 per share from ₹1,720 earlier, while maintaining a ‘Hold’ rating. At 10:05 am, ICICI Lombard shares were trading 4.68% higher at ₹1,726.20 apiece on the BSE.