Shares of ICICI Lombard General Insurance Company tumbled 15% on Thursday, putting the stock on course for its steepest single-day decline in more than six years after brokerages slashed target prices following the company's weaker-than-expected June quarter earnings.
The stock plunged to a fresh 52-week low of Rs 1,544.60 on the NSE. If the losses hold through the close, it would mark ICICI Lombard's worst single-day decline since the COVID-19 market crash in March 2020, when the stock had fallen about 18% in a single session.
The insurer on Wednesday reported a 46% year-on-year (YoY) drop in net profit to Rs 403 crore for the April-June quarter of FY27, hit by two large fire insurance claims and the impact of a Supreme Court judgment on its motor third-party portfolio. Here’s what brokerages said about the company’s earnings print and what lies ahead.
Also read | ICICI Lombard Q1 profit slumps 46% to Rs 403 crore on fire claims, SC verdict impact
Nuvama on ICICI Lombard share price
Nuvama in its note warned of an 'industry-wide threat', which is high Combined Operating Ratio (CoR) for the general insurance sector. It noted that gross direct premium income (GDPI) and gross written premium (GWP) growth moderated to just 7.5% and 10.0% YoY, respectively, as growth slowed in the fire business due to competitive pricing.
The fire line industry-wide fell 27.8% in Q1, with ICICI Lombard General Insurance declining more sharply at around 32% as it prioritised underwriting discipline over volume. The company’s management attributed the fire pricing pressure to a "relative soft reinsurance renewal" cycle.
Coupled with a high combined ratio in the motor segment, the industry loss ratio deteriorated to 128% in FY26 versus 123.5% in FY25; unit economics in motor third party (TP) are sub-optimal with capital limited to absorb further losses, Nuvama said. While ICICI Lombard's motor book is split roughly 50:50 between own damage (OD) and TP versus industry-typical 40:60 skew toward TP that structurally reduces its relative exposure to TP-related shocks, it added.
The brokerage said that the company’s overall loss ratio expanded 336 bps YoY to 76.4% mainly driven by motor and fire segment. Lower-than-expected investment income further dragged APAT. “Given potential industry-wide constraint in underwriting motor TP, we are cutting FY27E/28E APAT by 21.1%/11.7%,” it added.
Nuvama downgraded its rating on the shares of ICICI Lombard to ‘Reduce’ and slashed its target price by more than 29% to Rs 1,660 apiece. This implies a downside potential of more than 8.5% over the stock’s previous closing price.
Motilal Oswal on ICICI Lombard share price
Motilal Oswal noted that the company’s profit and CoR significantly missed estimates, while gross written premium growth at 10% YoY was in-line. It noted that the sharp decline in net profit was led by weak underwriting performance and lower-than-expected investment income.
The domestic brokerage maintained our NEP estimates but cut its profit estimates by 14% and 11% for FY27 and FY28, respectively. It increased its CoR estimates by 80bp and 20bp for the two financial years, considering the Q1 FY27 performance with respect to claims.
Motilal Oswal downgraded its rating on the shares of ICICI Lombard to ‘Neutral’ and reduced its target price to Rs 1,960 apiece, implying an upside potential of more than 8% from the stock’s previous closing price.
Emkay on ICICI Lombard share price
Emkay noted that ICICI Lombard reported a weak set of numbers—worse YoY and a big miss on estimates. “Amid a difficult operating environment—with no motor TP tariff hike in yet another year and intensified competition in commercial lines—a couple of negative one-offs made the quarter worse: Rs1.65bn of prudential provisions due to the recent Supreme Court rulings on Motor TP compensation for homemaker victims and Rs 0.63bn of losses in the fire segment,” the brokerage said.
ICICI Lombard remains among the best franchises in the sector, with far superior operating and financial metrics, Emkay however said, while adding that it sees the competitive dynamics and regulatory scenario as less favorable for profitability in the near term.
The brokerage maintained its ‘Add’ rating on the shares of ICICI Lombard, but reduced its target price by more than 9.5% to Rs 1,900 apiece. This implies an upside potential of around 5%.
Also read: General insurers clock 16.7% premium growth
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