On Wednesday, shares of ICICI Lombard experienced a notable decline of over 4%, following the company’s less-than-stellar financial results for the fourth quarter of FY25. This downturn prompted brokerage firms to lower their target prices for the stock, reflecting a cautious outlook on its recent performance. Despite a dip in net profit, the company managed to increase its total income, indicating a mixed bag of results that investors are keenly analyzing.
Financial Performance Overview
In its latest report, ICICI Lombard disclosed a 2% drop in net profit, amounting to ₹510 crore for the quarter ending March 31, compared to ₹520 crore during the same period last year. However, the insurance giant saw its total income rise to ₹5,851 crore, up from ₹5,165 crore a year earlier, showcasing its resilience despite profit challenges.
- Gross Direct Premium Income: Increased to ₹6,211 crore, a 2.3% rise from ₹6,073 crore in the previous year.
- Final Dividend Proposal: The board has suggested a dividend of ₹7 per equity share, which constitutes 70% of the face value of ₹10 for the financial year ending March 31, 2025.
Insights from Brokerage Firms
Nuvama Institutional Equities
According to Nuvama, ICICI Lombard recorded a modest 10.2% year-on-year growth in gross written premiums (GWP) for Q4FY25. The report highlighted the challenges posed by sluggish new vehicle sales and delays in accounting for long-term products. Key points include:
- Combined Ratio (CoR): Improved by 23 basis points quarter-on-quarter but rose 26 basis points year-on-year, reaching 102.5%.
- Loss Ratio: Increased by 298 basis points year-on-year, contributing to an underwriting loss of ₹2.1 billion.
- Adjusted Profit After Tax (APAT): Fell by 1.9% year-on-year to ₹5.1 billion due to a decline in investment income.
Given the current market conditions, Nuvama adjusted its target price for ICICI Lombard from ₹2,400 to ₹2,100, maintaining a ‘BUY’ rating.
JM Financial
JM Financial echoed similar sentiments, noting ICICI Lombard’s strong performance amidst a challenging environment. They observed:
- Combined Operating Ratio (COR): Achieved 102.5% for Q4 and 102.8% for the fiscal year, deviating from earlier forecasts.
- Gross Written Premium Growth: Experienced a rebound, with a reported 8.0% growth in Q4.
However, investment income saw a significant decline of 17.3% year-on-year and 26.0% quarter-on-quarter, leading to a revised target price of ₹2,150, down from ₹2,222, while still recommending a ‘BUY’ stance.
Current Share Price Movement
As of today, ICICI Lombard shares opened at ₹1,757.30 on the BSE, reaching an intraday high of ₹1,794.05 and a low of ₹1,745.80. Financial analysts are observing potential buying opportunities, with Anshul Jain from Lakshmishree Investment and Securities suggesting that investors may benefit from accumulating shares around the ₹1,700 mark. He identified the 50% retracement level of the recent price drop, set at ₹1,955, as a significant upside target.
Conclusion
The latest financial results from ICICI Lombard highlight a complex scenario of increased income amidst declining profits. With brokerage firms adjusting their outlooks and target prices, investors are urged to stay informed and consider market dynamics carefully. As the company navigates these challenges, it remains pivotal for stakeholders to monitor upcoming developments and market reactions.
