Operating Profit fell 92.6% YoY to Rs 33cr on higher claims in Health segment. As a result, PAT also declined 61.9% YoY to Rs. 152cr, partly offset by higher capital gains (Rs. 244cr vs. Rs. 61cr in Q1FY21). As the profitability of the company in the near-term might be affected by pandemic related uncertainties, we expect the bottom line to be under pressure for coming few quarters. Hence, with a cautious stance, we...

Given the uncertainties going ahead and punchy valuations; we rate ICICIGI a REDUCE with a revised target price of INR1,250 (DDM derived Mar-23E P/E of 27.4x and a P/ABV of 5.0x). ICICI Lombard: ICICIGI reported an NEP print 6% ahead of our estimates. While FY22E growth in top-line expected to return in FY22E (low base impact), ICICIGI is expected to witness higher CORs as a result of resurgence in Covid cases amidst the second wave, and increased motor traffic vs. 1HFY21. Additionally, new motor regulations are expected to drive down both claims and tariffs, creating supernormal profitability in the short term. We expect a motor TP price hike in FY22E to be a positive catalyst for growth.

Gross direct premium income (GDPI) rose 9.3% YoY, positively impacted by P&C; segment (25.7% YoY) and Motor segment (14.3% YoY). PAT grew 6.6% YoY to Rs. 314cr owing to capital gains of Rs. 108cr (vs Rs. 17cr in Q3FY20) and lower claims incurred (-2.3% YoY). Though we may see increase its sales and promotional expenses owing to pressure from competition, we expect the margins to improve from current levels. Hence, we upgrade our rating to BUY on the stock with a rolled forward target price of Rs. 1,591 based on 7x FY23E BVPS....

Gateway Distriparks: In 3QFY21, Gateway Distriparks' (GDL) EBITDA margin expanded 150bps QoQ to 26.3% and interest costs reduced to Rs 177mn (-18% QoQ) as the company deleveraged its balance sheet. This led to a significant PAT beat (Rs 327mn vs 40mn QoQ). The management has provided an upbeat outlook. In Sep-20, we upgraded Gateway Distriparks to BUY, given the company's improving fundamentals. We raise our FY22/23 estimates by ~6%. Maintain BUY with an SOTP-based target price of Rs 165, at 9x FY23E EV/EBITDA for the rail business. ICICI Lombard: While FY21E is expected to be a muted year in topline growth, ICICIGI is expected to deliver lower CORs. Lower COVID-19 cases and vaccination make us incrementally positive on the health segment. Additionally, changing motor regulations are expected to drive down both claims and tariffs, creating supernormal profitability in the short term. We believe that this period (of supernormal profitability) will be shortlived, as we expect IRDAI to restrict TP pricing growth, thereby limiting profitability. We believe the market is not factoring in this risk; accordingly, we rate ICICIGI a REDUCE with a revised target price of Rs 1,230 (DDM derived Sep-22E P/E of 27.9x and a P/ABV of 5.4x). IRB Infra: IRB reported stellar 3QFY21 with revenue at Rs 15.5bn, beating our estimate by 15%. The outperformance was driven by 32% QoQ recovery in toll collections and improved EPC execution with 41.5% QoQ growth. There were no new order wins during the quarter. The company registered a profit of Rs 695mn, 37% beat. While toll collection...

We continue to have a Buy rating on ILGI with a revised PT of Rs. 1,710. We had management interaction with ICICI Lombard General Insurance (ILGI) to get a business update. Higher collections in the health insurance vertical and momentum on overall business are positive. Recovery (and rebound) in auto sales augur well for the motor business. Strong pickup in the health segment has also helped post GDPI collections, which are encouraging. Premium income had already normalised for H1FY2021 (GDPI growth of 0.8% y-o-y for H1FY2021) and traction for October and November was healthy (YTD GDPI growth of 3%), which indicates...

We continue to have a Buy rating on ILGI with a revised PT of Rs. 1,710. We had management interaction with ICICI Lombard General Insurance (ILGI) to get a business update. Higher collections in the health insurance vertical and momentum on overall business are positive. Recovery (and rebound) in auto sales augur well for the motor business. Strong pickup in the health segment has also helped post GDPI collections, which are encouraging. Premium income had already normalised for H1FY2021 (GDPI growth of 0.8% y-o-y for H1FY2021) and traction for October and November was healthy (YTD GDPI growth of 3%), which indicates...

ICICI Lombard General Insurance (ILGI) reported strong Q2FY2021 results, better-than -expected operational performance, along with lower claim ratios and combined ratios further sweetening the performance. Performance was strong on the cost aspect, with combined ratio (lower is better) at 99.7% (same as Q1FY2021, was 100.4% in FY2020). Solvency ratio has improved further to 2.74x in Q2 FY2020 as against 2.17x in March, which is positive. ILGI trades at 32.9x/26.8x its FY2022E/FY2023E EPS and its long-term business fundamentals have remained steady even during times of crisis....

Gross direct premium income (GDPI) dropped 5.3% YoY, negatively impacted by Motor GDPI (adversely impacted by lockdown) and Health, Travel & PA (owing to lower disbursement from Banks and NBFCs). We expect steady performance from P&C; segment and Motor segment should do well in the coming quarters given the regulatory changes. Given limited upside, we maintain our HOLD rating on the stock with a revised target price of Rs. 1,398 based on 7.5x FY22E BVPS. Industry GDPI weighed down by COVID...

Valuation and Outlook: We have valued the stock based at 7.78x 1-yr forward P/BV mean and has arrived at a price target of Rs. 1487 with a potential upside of 15% and we rate it HOLD.

Valuation and Risks: We have valued the stock based at 7.55x 1-yr forward P/BV mean at 0.8 x discount and has arrived at a price target of Rs. 1155 with potential downside of 13% and we rate it SELL'.

In Q4FY20, Gross Direct Premium Income (GDPI) dropped 8.7% YoY, negatively impacted by de-growth of 4.1% YoY in Motor GDPI. Net premium increased 6.7% YoY, owing to Fire segment (+89.0% YoY). ROE increased 130bps YoY, supported by PAT (+23.8% YoY). The company's strong distribution network should help the company to withstand the challenging times. Hence, we maintain our HOLD rating with a revised target price of Rs. 1,321 based on 7.0x FY22E BVPS. GDPI declines on weak Motor segment...

Over FY21E we expect lockdown and partial working conditions to result in lower new motor vehicle policy sales, lower renewals, and also lower motor CORs. We expect health premiums to grow with some increase in claims, but over time we expect higher pricing power in health to protect profitability. Overall projecting FY21E remains a challenge but we believe this period should be better for company profitability. Additionally, changing regulations in motor are expected to drive down both claims and tariffs, creating supernormal profitability in the short term. We believe that this period (of super-normal profitability) will be short lived, as we expect IRDAI to clamp down on TP pricing restricting profitability. We believe market is not factoring this risk, and post recent run-up in share price we downgrade ICICIGI to a SELL with a reduced TP of Rs 1,042 (Mar-22E P/E of 26.2x and a P/ABV of 5.5x). ICICIGI reported an in-line ex. crop 4QFY20 NEP growth of 13.8% YoY to Rs 23.6bn. Underwriting profits were at Rs (1.3)bn (vs. exp. of Rs 0.1bn) as calc. COR increased to 104.1% (+439/467bps YoY/QoQ). Lower post prov. investment yield of 6.7%, meant a 12.6% lower than estimated APAT of Rs 2.8bn (+23.8/-4.1% YoY/QoQ).

With a long run-way of growth, improving regulatory environment, and strong innovation opportunities, we remain positive on the general insurance sector. Regulatory crack-down on motor TP pricing is key risk. Pvt. multi-line insurers Mar-20/FY20 GDPI grew -16.2/+11.7% YoY to Rs 67.1/911.8bn. Decline in Mar-20 was along expected lines as new policy sales have declined as a result of the lockdown and renewals have been impacted by the forbearance (until 15-May-20) given by IRDAI on premium payments, and extra time (until June-20) allowed for claiming deduction under the IT Act, for the purchase of health cover.

We will be reviewing our numbers and recommendations once we have a better understanding of the Covid-19 situation. ICICIGI: GDPI (ex-crop) increased 13.3% YoY to Rs 10.4bn. Growth momentum (ex crop) improved from -2.0/12% YoY seen in Dec-19/Jan-20. Health and Motor OD business reported growth (ahead of industry) of 12.4% and 12.7% respectively. FY20TD GDPI for ICICIGI stands at Rs 125.7bn (-7.5% YoY), with ex-crop GDPI is healthy at Rs 121.7bn (+13.9% YoY). We have a SELL on ICICIGI with a TP of Rs 1,170 (Mar-22E P/E of 26.0x and a P/ABV of 5.7x). ICICIGI is currently trading at a FY21/22E P/E of 26.6/22.3x and P/ABV of 4.9/4.0x. NIACL: GDPI grew to Rs 19.3bn, +24.2% YoY (ex. crop at Rs 18.6bn, +26.0% YoY) led by growth primarily in health business. Growth in retail business segments such as motor TP/health improved moderately to 20.7/30.3% YoY. FY20TD GDPI for NIACL stands at Rs 246.9bn (+15.6% YoY), ex-crop GDPI at Rs 219.1bn (+12.7% YoY). We have a SELL on NIACL with a TP of Rs 130 (0.65x Mar-22E ABV (less 5% discount for expected 10.4% supply). NIACL is currently trading at a FY21/22E P/E of 7.4/6.2x and P/ABV of 0.4/0.4x. Bajaj Allianz General Insurance (BAGIC): GDPI slipped by 1.4% YoY in Feb-20 to Rs 7.0bn, (ex-crop GDPI at Rs 6.6bn +1.6% YoY) led by sharp decline in crop business (-32.2% YoY). Motor OD GDPI declined 8.6% YoY vs. industry decline of 2.7% YoY. FY20TD GDPI for BAGIC stands at Rs 120.5bn (+20.1% YoY), while GDPI (ex-crop) is Rs 89.4bn...

The combined ratio worsened to 98.7% compared with 95.9% in Q3FY19 mostly due to roll out of long term insurance policies. The de-growth in the Crop segment and higher loss ratio in the Motor OD segment would affect the profitability in the short term. Hence, we...

Improvement in Underwriting Performance and Increase in Fire and Retail Health GDPI Worked in Favour.

We expect changing regulations in motor to drive down both claims and tariffs, creating supernormal profitability in the short term. We believe that this period (of super-normal profitability) will be short lived, as we expect IRDAI to clamp down on TP pricing restricting profitability. We believe market is not factoring this risk, accordingly we rate ICICIGI a SELL with a reduced TP of Rs 1,126 (Dec-21E P/E of 26x and a P/ABV of 5.7x). ICICIGIs 3QFY20 saw NEP growth of 16.4% YoY (ex crop 22.2% YoY, +10.3% vs. est.) to Rs 24.5bn, decline in COR (calc.) to 99.5% was also better than est., but investment yield of ~7.3% (-80/-114bps YoY/QoQ), weighed on APAT, which at Rs 2.94bn grew +23.0/-14.9% YoY/QoQ, (-2.6% vs. est.)

Improvement in Underwriting Performance and Increase in Motor-TP and Motor-OD GDPI Worked as a Charm.

ICICIGI is best positioned to benefit from changing regulations in motor which will drive down both claims and tariffs. However, we expect high competitive intensity and lower motor TP tariffs (de-tariffication/price reduction) to restrict underwriting margins and investment profits. Accordingly, we rate ICICIGI a SELL with a TP of Rs 1,060 (Sep-21E P/E of 26x and a P/ABV of 5.6x). ICICIGIs 2QFY20 saw an NWP decline of 2.1% YoY to Rs 21.7bn, increase in COR (calc.) to 103.7% (+184bps YoY) as expenses increased while claims ratio declined, and lower investment yields of ~8.4% (-121/-111bps YoY/QoQ).

Slow start to the year but fundamentals intact ICICI Lombard General Insurance is a private general insurance company, listed on 27th Sept 2017. The company offers various insurances covering...