Share price of ICICI Lombard General Insurance Company fell as much as 4%, after the company posted weaker-than-expected earnings for the March quarter.
While the company earned 20% more net premium in the reporting quarter compared to the base quarter. Despite that though, a 25% increase in claims-related costs almost completely offset the growth in the net premium earned.
On top of that, the insurer's operating profit for the period fell 26% on year to Rs 416 crore, the company informed the exchanges post-market hours on Tuesday.
ICICI Lombard’s combined ratio was 102.8% for the recently ended financial year compared to 103.3% in its previous financial year.
Apart from the weak Q4 show, the private-sector insurer also faced the wrath of downgrades from brokerages across the board. Morgan Stanley downgraded the stock to an ‘equal-weight’ from its previous ‘overweight’ stance. In addition, the brokerage also trimmed its target price for the stock to Rs 1,855, reflecting the scope for a mere 2% upside over the Tuesday’s closing price. The stock has lost over 13% in the last six months.
While Morgan Stanley does like the insurer’s profitable growth focus, it sees limited upside in the stock at the current valuation of 26 times the earnings estimate for FY26 due to weaker FY25-exit earnings.
Joining the list was Nuvama Institutional Equities that also slashed its target price on the stock by 12.5% to Rs 2,100, even though it retained its ‘buy’ rating on the stock. Slowdown in new vehicle sales and deferred accounting on long-term products triggered to a softer growth in the company’s gross written premium, Nuvama said. ICICI Lombard’s board has recommended a final dividend of Rs 7 per share, which is 70% of the face value, for the financial year ended March.
Motilal Oswal and HDFC Securities, on the other hand, expect the company's growth to recover in FY26. Its combined ratio is seen improving to 101.5% by FY27. The insurer's net will likely grow 14% in the ongoing financial year and 16% in the next financial year, Motilal Oswal said in a report, adding it has broadly retained its view on the company's earnings.
