We expect the premium growth to recover to ~14% CAGR (vs ~7% CAGR over FY19-22), led by an improvement in motor growth (to +12% vs 4%) with pick-up in auto sales, reducing pricing pressures and improving market share in CV segment and the continued strength in health premiums (+17%) as agency network scales up over FY23. The merged entity growth (+11% in 4Q22) has held up in April-May 2023.
Company offers a resilient business model: After the Bharti AXA acquisition, ICICI Lombard’s (ILGI) leadership further strengthened (200bp ahead of the next player). It has among the most diversified portfolio across products and claims outcomes have been consistently ahead of the industry. ILGI’s strategy to target specific profit pools have consistently yielded superior market share in private-sector profit (~45% in FY22) vs its share in premium (~14%).We initiate with an ‘Outperform’ rating and value ILGI at 32x 24-month forward earnings (20% discount to long term mean) to arrive at our target price of Rs 1,400.
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