ICICI Lombard shares rise after analysts meet; check brokerage views & target prices

Analysts have a mixed view on ICICI Lombard General Insurance Company Ltd (ICICI Lombard) after its analysts' meet held over the weekend. The private general insurance player outlined its key initiatives in the digital space that will be a vital part of its strategy for improving growth and profitability going ahead.

The company is focused on leveraging technology to improve marketing, underwriting and customer engagements, said the analysts, while harnessing benefits of cloud migration, leverage data analytics, application of generative AI across business functions were key points of discussion.

Brokerage firms including Morgan Stanley and Motilal Oswal Financial Services see up to 20 per cent upside in the insurance player, while other analysts from Kotak Institutional Equities remain negative on the stock but have increased its target price but see a double-digital slide in the counter.

Overseas brokerage firm Morgan Stanley remains positive on ICICI Lombard with an 'overweight' call and has a target price of Rs 1,875 on it. ICICI Lombard's Q3FY24 gross written premium (GWP) from apps rose 3.2 times on a year-on-year (YoY) basis, while 9MFY24 GWP from digital partnerships grew four times.

"It continues to focus on customer engagement, fraud detection and driving efficiency," said Morgan Stanely. "It has developed several data-driven solutions to business problems," it added.

"Digitization has been implemented across segments within the company and encompasses the entire journey for various stakeholders, including customers, distribution partners and garages. It is also the first major insurer that has moved all core applications to a cloud platform," said Motilal Oswal.

The company’s ILTakeCare app has been its key initiative in the health and motor segments. The app onboards customers and provides support services. In comparison to last year, the app has seen 2.1x growth in downloads and has garnered 3.2 times GWP. It has witnessed 9.7 per cent reduction in human touch points per policy, said Motilal Oswal.

The company aspires to increase its indemnity health market share from the current 3 per cent to 4.5 per cent over the next 3-5 years by focusing on product development and cross-selling across channels, Motilal added. "The company will continue to invest in digital and tech initiatives," it said.

"Over the last few quarters, ICICI Lombard has gained market share in the motor segment as the pricing environment has been relatively more conducive. The company would operate within the 9.5-11 per cent range of market share in the motor insurance segment. In the medium term, efficiencies from these investments, along with scale benefits, will boost profitability," it said with a buy rating and a target price of Rs 2,000.

Shares of ICICI Lombard rose about 1.9 per cent to Rs 1,717 on Monday, commanding a total market capitalization close to Rs 85,000 crore. The scrip had settled at Rs 1685.05 in the previous trading session on Thursday. The stock has surged about 60 per cent in the last one year.

ICICI Lombard started migrating non-core workloads to cloud in 4QFY21 and by February 2022, all workloads were migrated to cloud. In FY2023, the focus was on building cloud native apps. ICICI Lombard is undergoing a business transformation effort called ‘Orion’ to better utilize cloud capabilities, said Kotak Institutional Equities.

"Cloud infrastructure allows real-time calculation of sourcing loss ratios. This highlights any build-up of stress in the portfolio, allowing the business teams to take corrective action. While using on-premise data centers, there is significant impact on business due to seasonality of demand," said added with a 'reduce' rating but a revised target price of Rs 1,475 from Rs 1,400 earlier.