ICICI Lombard: ICICI Securities Reiterates BUY, Sets Rs 2,250 Target

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AuthorRiya Kapoor|Published at:
ICICI Lombard: ICICI Securities Reiterates BUY, Sets Rs 2,250 Target
Overview

ICICI Securities initiated a 'Buy' recommendation for ICICI Lombard General Insurance Company, setting a price target of ₹2,250. The brokerage cites healthy earnings growth of over 25% projected through FY25 and a 16% five-year CAGR. Despite cyclical sector challenges, the outlook is positive, supported by GST cuts.

ICICI Securities maintained its 'Buy' stance on ICICI Lombard General Insurance Company, reaffirming a price target of ₹2,250. This valuation is based on rolling forward to FY28 earnings estimates, applying a multiple of 28 times to a projected Earnings Per Share (EPS) of ₹79.4. The previous target was pegged at 32 times FY27E EPS of approximately ₹70.3.

Growth Drivers and Outlook

The brokerage highlighted ICICI Lombard's robust earnings growth trajectory. Projections indicate healthy expansion of 25.4% between FY22 and FY25, with an 11.3% year-on-year growth observed in the nine months of FY26, excluding capital gains. Over a five-year span, the earnings compound annual growth rate (CAGR) stands at a notable 16%. This consistent compounding potential justifies a premium valuation for the stock.

Sectoral Dynamics and Adjustments

While acknowledging cyclical headwinds in the sector, such as subdued motor growth and elevated loss ratios, ICICI Securities views these as transient. The near-term outlook is improving, buoyed by reductions in Goods and Services Tax (GST). The research report also noted minor adjustments to FY26 and FY27 estimates, with a reduction of around 2% and 3% respectively. These adjustments stem from accounting-related escalations and higher combined operating ratio (COR), rather than the impact of labour code costs, which remain stable.

The analysis suggests that higher growth expectations are key to achieving the FY28 earnings targets, even as accounting factors lead to modest near-term estimate revisions. The strong historical performance and positive sector outlook support the continued 'Buy' recommendation.

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