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After Weak Market Debut, ICICI Lombard Shares Recover

ICICI Lombard's IPO was purely an offer for sale, in which its promoter ICICI Bank offloaded a 7 per cent stake and Fairfax Financial sold a 12 per cent stake.

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After Weak Market Debut, ICICI Lombard Shares Recover

ICICI Lombard General Insurance Company is India's largest private sector non-life insurance company


Highlights

  1. ICICI Lombard is India's largest private sector non-life insurance firm
  2. ICICI Lombard stock fell 3.38% to Rs 638.65 against issue price of Rs 661
  3. ICICI Lombard IPO was subscribed 3 times during September 15-19
ICICI Lombard General Insurance Company made a lacklustre debut on stock exchanges today. Shares of ICICI Lombard, India's largest private sector non-life insurer, fell as much as 3.38 per cent to Rs 638.65 against its issue price of Rs 661. However, it recovered later on and traded above the issue price. The stock failed to give listing gains to its investors because of the recent weakness seen in the markets, analysts say. ICICI Lombard's Rs 5,700-crore IPO, the second biggest this year, was subscribed 3 times during September 15-19. Institutional investors' segment of the IPO was subscribed over 8 times.

ICICI Lombard's IPO was purely an offer for sale (OFS), in which its promoter ICICI Bank offloaded a 7 per cent stake and Fairfax Financial sold a 12 per cent stake.

ICICI Lombard General Insurance Company is India's largest private sector non-life insurance company with a market share of 20.2 per cent in the first quarter of FY2018 among all the private non-life insurance players in India.

ICICI Lombard has maintained its leadership position among private non-life insurers since 2004, supported by its robust franchise, a comprehensive product portfolio and a multi-channel distribution network, say analysts.

ICICI Lombard has a diversified product mix comprising motor, health & personal accident, crop/weather, fire, marine and engineering insurance products, which contributed 42.3, 18.9, 20.1, 6.9, 3.2 and 2.1 per cent to its gross direct premium income (GDPI) in FY2017 respectively.

ICICI Lombard has reported a net profit of Rs. 642 crore in FY17, up 27 per cent over the previous fiscal year. For the first quarter of current fiscal year, the company reported a net profit of Rs. 214.3 crore, an annual growth of 66 per cent.

Chintan Gupta, a research associate at Way2Wealth, said ICICI Lombard was expensively priced, but added the insurance business still has low penetration levels in India and thus has a strong outlook from a long-term perspective.

"Currently due to the high liquidity in the market, companies are pricing themselves at a higher premium," Gupta said.

"However, from a long-term perspective it still is a good investment."

As of 11:35 am, ICICI Lombard shares traded 2.60 per cent higher at Rs 678.20.


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