However,
, in its recent report, initiated coverage on the stock with a ‘Buy’ rating and a target price of Rs 1,500, signalling a potential upside of over 17 per cent in the counter from its previous close of Rs 1,277.40.
The company with a market capitalisation of more than Rs 62,000 crore as of July 7, 2022, had hit a 52-week high of Rs 1,674 on September 22, 2021.
Motilal Oswal highlighted that the stock has corrected by 31 per cent over the past 18 months, even as Nifty50 remained flat. The steep correction has been on account of a shift in the management’s focus to growth from profitability earlier and an expected reduction in
‘s stake to sub-30 per cent levels by September 2023 as per RBI regulations from 48 per cent at present.
“After the correction, the stock is trading near an all-time low one-year forward valuation. The stock should re-rate towards its historic valuation as it delivers profitable growth and clarity emerges on the stake sale,” the brokerage added.
MOSL said that the general insurance industry is all set to deliver a healthy 12 per cent CAGR in premiums over the next decade led by the healthy trend in auto sales, sustained strong momentum in health insurance demand and commercial insurance lines growing in line with robust economic growth.
“Amidst this, has emerged to be India’s largest private sector general insurance company post its merger with Bharti Axa (BAXA). Stronger correlation with new auto sales, investments into health distribution channels, synergies from BAXA merger and expected results of past investments in technology are the key earnings triggers for ICICI Lombard,” it said.
While the delayed ROE recovery warrants a discount to long-term multiple, global brokerage Credit Suisse believes execution on growth and health franchise scale-up will drive re-rating for the company. “Earnings outlook remains strong and even after the strong base in FY23, we expect EPS CAGR of ~23 per cent over FY23-25. We initiate coverage with an ‘Outperform’ rating and value ILGI at 32x 24-month forward earnings to arrive at our target price of Rs 1,400,” it said.
It expects premium growth to recover to 14 per cent CAGR, led by improvement in motor growth with a pick-up in auto sales, reducing pricing pressures and improving market share in the CV segment; and continued strength in health premiums as the agency network scales up over FY23.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)