HSBC and CLSA have issued "buy" recommendations on ICICI Lombard General Insurance shares, following the company's strong Q2 results. The insurer's shares rose over 0.8 percent on Thursday, on the National Stock Exchange. This comes on the back of robust premium growth and market share gains, which led to price targets being set at Rs 1,578 and Rs 1,640 by HSBC and CLSA respectively.
The company's financial health has shown signs of improvement as the combined ratio decreased to 103.9 percent from 105.1 percent last year. This moderation is projected to drive an increase in the FY23-26 EPS CAGR, surpassing top-line growth. This is expected to result in a 2.1-3.6 percent increase in EPS for FY2024-26.
ICICI Lombard's gross direct premium income grew by 17.4 percent to Rs 6,086 crore, outpacing the industry growth rate of 12.5 percent. Despite challenges such as floods and seasonal diseases, the motor book performed strongly. As a result, CLSA raised its FY24 growth estimate from 15 percent to 17 percent.
However, not all financial institutions are bullish about ICICI Lombard's future prospects. Macquarie issued an “underperform” rating with a target of Rs 995 per share due to increased loss rates in the motor segment and heightened operational expenses. Similarly, Nuvama Institutional Equities maintained a "hold" position with a target price of Rs 1,350 citing high valuations and a valuation at 5.0x FY25 P/BV.
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