HSBC tags ICICI Lombard with ‘Reduce’ rating, gross premium in non-life insurance may rise at CAGR of 19%

Global research and broking firm HSBC has initaited a coverage on ICICI Lombard with a ‘Reduce’ rating. According to the firm, the stock looks expensive on multiple counts and has a target of Rs 610 per share.

ICICI Lombard has been able to generate an average investment yield of 10 percent in last three years, it said. The research firm feels that non-life insurance industries’ gross written premium can rise at CAGR of 19 percent in five years.

The company last month on January 16, 2018 reported a 5.2 percent increase in profit after tax (PAT) at Rs 231.76 crore for the quarter ended December 31, 2017. Total income rose to Rs 2,019.77 crore from Rs 1,842.93 crore in the year-ago period, ICICI Lombard said in a BSE filing.

The insurer’s combined ratio, which is a measure of their underwriting performance, improved to 96 percent in Q3 of FY18 from 106.6 percent a year ago.

Bhargav Dasgupta, CEO of the company said, “Our combined ratio has improved to 100.4 percent in the nine months of FY18 from 106.2 percent in the same period last year. Our focus is going to bring down our combined ratio to 100 percent, going forward.”

At 12:13 hrs ICICI Lombard General Insurance Company was quoting at Rs 815.65, up Rs 5.20, or 0.64 percent. It has touched an intraday high of Rs 823.15 and an intraday low of Rs 806.00.

The share touched its 52-week high Rs 872.00 and 52-week low Rs 619.00 on 17 January, 2018 and 31 October, 2017, respectively.

The company’s trailing 12-month (TTM) EPS was at Rs 18.27 per share. (Dec, 2017). The stock’s price-to-earnings (P/E) ratio was 44.64. The latest book value of the company is Rs 82.12 per share. At current value, the price-to-book value of the company was 9.93.moneycontrol