ICICI Lombard Shares May Rally 22% Says Yes Securities After Q3 Results
Yes Securities has come out with a bullish report on ICICI Lombard, stating that the company’s shares may rally by up to 22% after its Q3 results. The brokerage firm has revised its target price for the stock, citing robust growth in gross direct premium income (GDPI).
Robust GDPI Growth
According to Yes Securities, ICICI Lombard delivered a robust GDPI growth of 13.3% year-over-year (YoY) in Q3 FY26, outpacing the industry growth of 11.5%. This growth was driven by a strong performance in the health insurance segment, which saw a significant increase in premiums. However, the brokerage firm noted that the headline OEM sales growth of 19% has not translated into commensurate motor premium growth, as sales were skewed toward small hatchbacks.
Motor Segment GDPI Growth
The motor segment GDPI grew 9.3% YoY, which was lower than expected. However, Yes Securities believes that realignment efforts are underway to address this gap. The brokerage firm expects the motor segment to show improvement in the coming quarters, driven by an increase in vehicle sales and a rise in premium rates.
Revised Target Price
Yes Securities has revised its target price for ICICI Lombard shares to Rs 1,600, implying a potential upside of 22% from current levels. The brokerage firm has maintained its ‘buy’ rating on the stock, citing its strong underwriting discipline, robust distribution network, and improving profitability.
Investment Rationale
Yes Securities believes that ICICI Lombard is well-positioned to benefit from the growing demand for insurance products in India. The company’s strong distribution network, which includes a large network of agents and brokers, will help it to tap into the growing market. Additionally, the company’s focus on digital transformation will help it to improve its operational efficiency and reduce costs.
Key Risks
Yes Securities has identified several key risks that could impact ICICI Lombard’s performance, including intense competition in the insurance industry, regulatory changes, and a rise in claims. However, the brokerage firm believes that the company’s strong underwriting discipline and robust risk management framework will help it to mitigate these risks.
Valuations
Yes Securities believes that ICICI Lombard’s valuations are attractive, considering its strong growth prospects and improving profitability. The brokerage firm expects the company’s return on equity (ROE) to improve in the coming years, driven by an increase in premiums and a rise in investment income.
Conclusion
In conclusion, Yes Securities’ report on ICICI Lombard is bullish, citing the company’s robust GDPI growth, strong underwriting discipline, and improving profitability. The brokerage firm’s revised target price of Rs 1,600 implies a potential upside of 22% from current levels, making it an attractive investment opportunity for investors. However, investors should be aware of the key risks that could impact the company’s performance and should do their own research before making any investment decisions. For more information on insurance sector and stock market news, please visit our website.
