Exemption of GST has made health/motor insurance more affordable for customers. ICICI Lombard's management remains committed to passing on the complete benefit of lower GST rates to policyholders which should accrue higher volumes.
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ICICI Securities Report
ICICI Lombard General Insurance Company Ltd. has reported healthy earnings growth of 25.4% over the last three years and 22.9% YoY growth in H1 FY26 (26.2% ex-capital gains). Even on five-year basis, earnings CAGR is 16%, highlighting the compounding potential of the stock which warrants a commensurate multiple.
Sectoral challenges, in terms of lower motor growth and higher loss ratios, are cyclical but growth may improve in H2 FY26 driven by GST cuts accompanied with better loss ratios.
Upgrade to Buy from Add, as we revise our target price to Rs 2,250 (vs Rs 2,078), based on 32x FY27E EPS of ~Rs 70.3 (earlier 30x FY27E EPS of Rs 69.3).
Higher growth expectation is the primary driver for upgrades.
Key risk: Earnings impact from higher competitive intensity.
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