Hike in insurance premium to benefit company
According to Sharekhan, ICICI Lombard General Insurance Company reported gross direct premium income (GDPI) of Rs. 4,666 crore, up 32% y-o-y in Q4FY2022.
“However, the company is still facing headwinds such as weak auto sales cycle where ILGI has higher market share and no TP tariff hikes in the motor segment. However, the company’s focus on the health segment and investments coupled with hike in motor TP rates are likely to accelerate growth going ahead.,” the brokerage has said.
Net premium earned sees sharp growth
According to Sharekhan, net premium earned grew by 27% y-o-y (flat sequentially) to Rs. 3,318 crore.
“In Q4FY2022, PAT stood at Rs. 313 crore versus street estimates of Rs. 344 crore, down 10% y-o-y. This was primarily due to higher combined ratio and lower income from investments. For FY2022, PAT was Rs. 1,473 crore, down 14% y-o-y. Underwriting losses continued to be higher at Rs. 309 crore in Q4FY2022 versus Rs. 91 crore in Q4FY2021 versus Rs. 269 crore in Q3FY2022. However, the company’s market share leadership in the motor segment stood at 11.8% in March 2022, aided by increased focus on the CV portfolio (20% of motor premium mix),” the brokerage has said.
Retail health sees a fall
The mix of retail health has come down to 23.5% in health, travel and PA GDPI mix from 26.7% in FY2021.
“Benefits of digital health offerings and growth in the agency may not get reflected in the medium term. The motor segment witnessed operating profit growth of 33% y-o-y. While the retail health segment saw operating profit of Rs. 86 crore in Q4FYY2022 versus Rs. 57 crore in Q4FY2021 versus operating loss of Rs. 20 crore in Q3FY2022,” the brokerage has said.
Buy the stock with a price target of Rs 1620
Sharekhan believes the synergy benefits from Bharti Axa’s product profile would flow in terms of operating efficiencies coupled with the industry’s volumes picking up.
“We expect its gross written premium and EPS to witness CAGR of 15% and 35% during FY2022-FY2024E. At the current price, the stock trades at 36.4x/28x its FY2023E/FY2024E EPS. We maintain our Buy rating on ICICI Lombard General Insurance Company with a revised price target of Rs. 1,620,” the brokerage has said.