ICICI Lombard hits new high; stock surges 5% on heavy volumes

Till 11:54 AM; a combined 8.77 million equity shares representing 1.8 per cent of total equity of ICICI Lombard changed hands on the NSE and BSE, data shows.

Shares of ICICI Lombard General Insurance Company hit a new high of Rs 1,732.70, as they surged 5 per cent on the BSE in Tuesday’s intra-day trade amid heavy volumes. The stock of private general insurance company surpassed its previous high of Rs 1,667 touched on February 21.

Thus far in the month of February, the stock price of ICICI Lombard has rallied 16 per cent, while since January 16, post December quarter (Q3FY24) earnings, it has zoomed 26 per cent.

At 11:54 AM; the stock quoted 4.5 per cent higher at Rs 1,724, as compared to 0.06 per cent gain in the S&P BSE Sensex. The average trading volumes on the counter jumped multiple-fold today. A combined 8.77 million equity shares representing 1.8 per cent of total equity of ICICI Lombard changed hands on the NSE and BSE, data shows.

ICICI Lombard offers a comprehensive and well-diversified range of products through multiple distribution channels, including motor, health, crop, fire, personal accident, marine, engineering, and liability insurance.

ICICI Lombard had reported better-than-expected operating performance in Q3FY24 with the combined ratio (CoR) of 103.6 per cent coming better than analyst’s estimates of 104.3 per cent. Profit after tax stood at Rs 430 crore below analyst estimates, largely led by lower realized investment gains in the quarter and higher upfronting of acquisition cost due to strong growth in Motor OD.

The new MD and CEO, Sanjeev Mantri, reaffirmed the company’s long-stated strategy of driving profitable growth. With some early signs of improvement in competitive intensity in Motor OD and claims experience in health and commercial lines emerging as per expectations, management is very confident of achieving 102 per cent CoR by FY25, analysts at Emkay Global Financial Services said in result update.

However, management is also very clear about continuing to invest in distribution and technology to achieve growth in its focus area and, hence, is not looking to revise the FY25 CoR guidance downwards. The company maintains its focus on retail health; however, in the quarter gone by, growth has been a bit suboptimal due to deliberate recalibration of the portfolio to react to certain claims development, the brokerage firm said.

Going ahead, growth in the Motor segment is likely to be back-ended, with the company waiting for the rationalization of pricing in the OD segment. In the Health segment, the benefits of price hikes and improving the efficiency of the agency channel should translate into better profitability. Scale benefits, a favorable product mix (higher share of retail health), and improvements in efficiencies across channels should help ICICI Lombard improve the combined ratio and RoE over the next couple of years, said analysts at Motilal Oswal Financial Services. The stock, however, was trading above brokerage firm’s target price of Rs 1,650 per share.