ICICI Lombard shares plunge 15 pc as Q1 profit declines 46 pc
New Delhi, July 16
Shares of ICICI Lombard General Insurance tumbled nearly 15 per cent on Thursday in morning session after the company's June quarter earnings missed market expectations, with profit hit by higher claims and additional reserve provisions.
As of 11:35 am, the stock fell as much as 14.86 per cent to a fresh 52-week low of Rs 1,544.40 on the BSE during early trade.
At the last count, it was trading at Rs 1,614.30, a decline of 11 per cent from the previous close of Rs 1,814.
The sharp fall came after the private sector general insurer reported a 46 per cent year-on-year decline in net profit to Rs 403.17 crore for the April-June quarter of FY27, compared with Rs 747.08 crore in the corresponding period last year.
The company attributed the decline to higher claims and a Rs 165-crore reserve provision for its motor third-party (Motor TP) portfolio.
The insurance firm also said it incurred two large fire losses amounting to Rs 63 crore during the quarter, which impacted its combined ratio by one percentage point.
In addition, a Supreme Court judgment had an adverse impact of 2.8 percentage points on the combined ratio. As a result, the combined ratio -- a key measure of underwriting profitability -- rose to 107.2 per cent in the June quarter from 102.9 per cent a year earlier.
However, losses in the fire portfolio are not expected to remain elevated and reiterated that the long-term growth outlook for the health insurance business remains strong, with retail health continuing to outpace group health, according to the management.
Apart from that, analysts at Motilal Oswal Financial Services downgraded the stock to 'neutral' from 'buy' following the weak quarterly performance.
Over the long term, the stock has underperformed, declining nearly 20 per cent over the past year and dropping more than 10 per cent in the last six months.
— IANS
Reader Comments
I've been following this stock for a while. The 52-week low is scary 😨, but the management's outlook on health insurance gives some hope. However, with Motilal Oswal downgrading to 'neutral', I'm not touching this until the next quarter results show improvement.
Discount buying opportunity! 🙌 When quality stocks fall on one-off issues like reserve provisions and fire losses, it's time to accumulate. Retail health insurance growth story is real in India. Just don't expect immediate recovery. SIP-style approach for this one.
The Supreme Court judgment impact is a reminder that insurance companies in India face regulatory risks. The combined ratio deteriorating is a red flag. But ICICI Lombard has strong management and brand. I'd wait for the dust to settle before taking any decision. Need more clarity on motor TP claims trend.
As a small investor, this is frustrating 😤. I bought ICICI Lombard at ₹1,800 last month thinking it's a safe bet. Now down 15% in a single day. The fire losses and motor provision seem like short-term pain, but the stock has underperformed for a year. Thinking of averaging down.
The 46% profit decline is alarming, but let's be fair: the fire losses and SC judgment are non-recurring in nature. The health insurance segment is a strong growth driver in India's underpenetrated market. For long-term investors, this could be a buying opportunity at these levels. Just don't expect a quick bounce.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.