ICICI Lombard Q3 Results Review - Motor Segment Growth Improves As Guided: Yes Securities

Yes Securities Report

ICICI Lombard General Insurance Company Ltd. has started to grow faster than the industry on the back improved motor segment growth:

In Q3, gross direct premium income for the company grew 13.4% YoY compared with 12.3% for the industry. The company was consciously losing market share in the motor segment but has gained some market share in December 2023.

There was no revision in motor third party base premium for FY24. The company’s market share in private cars is 12% and in two-wheeler is around 22%.

Combined ratio for ICICI Lombard is somewhat elevated due to catastrophe events: The combined ratio for the company was 103.7% in nine months-FY24 versus 104.6% in 9MFY23.

Excluding the impact of CAT losses of Rs 1.37 billion in 9MFY24, the combined ratio was 102.6% in 9M FY24. The combined ratio for the company was 103.6% in Q3 FY24 versus 104.4% in Q3 FY23.

The company has maintained its guidance of 102% CoR by the end of FY25.

We maintain less-than-bullish 'Add' rating on ICICI Lombard with a unchanged price target of Rs 1600:

We ICICI Lombard at 34 times FY25 price/earning for an FY23-26E earnings per share compound annual growth rate of 16%.

At our target, the implied FY25E price/book is 5.8 times whereas the prospective return on equity profile is at ~17%.

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