ICICI Lombard dips 4% post March quarter results

Shares of ICICI Lombard General Insurance Company dipped 4.4 per cent to Rs 1,080.80on the BSE in Wednesday’s intra-day trade after the insurer's gross direct premium income grew at a sluggish 6.7 per cent year-on-year (YoY) and down 4.6 per cent quarter-on-quarter (QoQ) to Rs 4,977 crore in January-March quarter (Q4FY23). The stock had hit a 52-week low of Rs 1,049.10 on March 16, 2023.

At 11:35 AM, the stock was down 3.9 per cent at Rs 1,086, with a combined volume of around 1.94 million shares on the BSE and the NSE.

The country’s largest private sector general insurer reported a 39.6 per cent surge in net profit to Rs 436.96 crore in Q4FY23, aided by a lower loss ratio and a dip in underwriting losses. The insurer had reported a profit of Rs 312.51 crore in the year-ago period.

Market share remained steady at 8.2 per cent for FY23, with some improvement in motor segment. Among products, motor segment registered 9 per cent YoY growth while within health segment, retail and group grew 12 per cent and 28 per cent YoY, respectively. Combined ratio has declined 20 bps QoQ at 104.2 per cent and posted an underwriting loss of Rs 250 crore.

On an aggregate basis, topline growth remained healthy while a gradual improvement in combined ratio is driving earnings. Healthy premium growth coupled with steady market share remains encouraging. A gradual move towards reduction in combined ratio generates confidence. However, further recovery in market share and sustainability of improvement in combined ratio needs to be seen to act as catalyst for valuation ahead, ICICI Securities said in a note.

ICICI Lombard delivered better-than-expected performance in Q4FY23 on underwriting performance. Going ahead, growth in the motor segment is likely to be back ended with the company waiting for the rationalization of pricing in the own damage (OD) segment, Motilal Oswal Financial Services said.

On the health segment, the benefits of price hike and improving efficiency of the agency channel should translate into improved profitability. Synergy benefits from Bharti AXA merger (technology related), scale benefits, and improvement in mix on health business (higher share of retail health) should aid in improving the combined ratio and RoE over the next couple of years, the brokerage firm added.

Technical View
Bias: Neutral
Support: Rs 1,088; Rs 1,050
Resistance: Rs 1,097; Rs 1,113
 
The stock was in recovery stage and had just crossed the super trend line resistance at Rs 1,125. However, with today's fall, the chart set-up looks a bit indecisive, as one of the key momentum oscillators - the Slow Stochastic has given a negative divergence.
 
The price-to-moving averages action also remains negative as the 20-DMA (Daily Moving Average) languishes fairly below the other key moving averages. The 20-DMA now at Rs 1,088 is likely to be a key test for the stock in the near term. Sustained trade below the same could trigger a fall to Rs 1,050-odd level.

 
Resistance on the upside can be upside can be expected around Rs 1,097, followed by Rs 1,113.
 
On the weekly scale, the stock seems to have retraced after facing resistance around its 20-WMA (Weekly Moving Average) placed at Rs 1,144. In case, the stock fails to hold the recent lows around the Rs 1,050-level, it can dip to Rs 985.
 
(With inputs from Rex Cano)