Motilal Oswal has given Buy recommendation for ICICI Lombard recommended buy rating on the stock with a target price of Rs 1450 in its research re with a target price of Rs. 1450 in its research report issued on Oct 18, 2022
Motilal Oswal’s research report on ICICI Lombard
The underwriting loss for ICICIGI stood at INR1.5b in 2Q as against INR1.9b in 1QFY23, as OPEX grew at 9% as compared to a 11% growth in NEP. Claims ratio grew to 72.8% in 2Q v/s 72.1% in 1QFY23 as the benefits of a lower loss ratio in Motor TP and Fire were offset by higher claims in Motor OD and the Health segment. Claims ratio grew 300bp YoY. Investment income, at INR8.7b, was higher than our expectation of INR7.4b owing to better yields. The combined ratio stood at 105.1% v/s 105.3%/104.1% in 2QFY22/ 1QFY23. The solvency ratio stood at 2.5x v/s 2.6x in 1QFY23. Adjusted for a tax reversal of INR1.3b, PAT stood at INR4.6b (est. INR3.8b). Reported PAT stood at INR5.9b.
We raise our FY23/FY24 earnings estimate by 11%/4%, led by higher investment income, offset by a higher underwriting loss. During FY22-25, we see the company delivering a premium/PAT CAGR of 18%/26% and a RoE of 19% in FY24. We maintain our Buy rating with a one-year TP of INR1,450 (35x FY24E P/E).