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Geojit Financial
ICICI Lombard (Buy)
Target: ₹1591
CMP:₹1,465.90
ICICI Lombard General Insurance is a private general insurance company, listed on September 27, 2017. The company offers various insurances covering travel, home, health and motor segments.
For Q3-FY21, Gross direct premium income (GDPI) rose 9.3 per cent y-o-y positively impacted by P&C segment (25.7 per cent) and Motor segment (14.3 per cent). PAT grew 6.6 per cent to ₹314 crore owing to capital gains of ₹108 crore (vs ₹17 crore in Q3-FY20) and lower claims incurred (-2.3 per cent).
Though we may see increase its sales and promotional expenses owing to pressure from competition, we expect the margins to improve from current levels. The company has managed to hold profitability this quarter mainly from capital gains.
Also the recent hike in FDI limit up to 74 per cent, may help unlock further value in the near-to-medium term in this stock.
Hence, with a cautiously optimistic outlook, we upgrade our rating to Buy on the stock with a rolled forward target price of ₹1,591.
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