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Good performance; maintain REDUCE on valuation

ICICIGI delivered a healthy performance for Q1FY25, with CoR at 102.3% (Emkay est. 102.8%); better than estimated investment income resulted in PAT of Rs5.8bn (+49% YoY) vs. our estimate of Rs4.5bn. The management remains optimistic on the overall growth trajectory, and continues to balance profitability. During the quarter, the old-vehicle vertical led to growth in motor, and strong growth in group health, with seasonality of commercial lines led to materially lower OpEx ratio (13.3% in Q1FY25 vs 17.2% in Q1FY24). The new Retail Health product, ‘Elevate’ is expected to drive further growth in the retail Health segment. To factor in the Q1 developments, we increase our GWP estimates by 3-5%, while building in a slightly improving CoR (~0.2ppt) for FY25-27E, leading to 2-7% increase in FY25-27E EPS. ICICIGI shares have outperformed the broader markets during the past few months, resulting in the stock currently trading at 31.4x FY26 P/E. Given the high valuations, we reiterate our REDUCE rating, revising up Jun-25E TP to Rs1,800/sh from Rs1,650/sh earlier.

Better Underwriting performance and Investment income drive PAT beat For Q1FY25, ICICIGI delivered robust GWP growth of 19.8% YoY, at a minor 1.7% miss to our estimates. While the Claims ratio stood at 74% as against our estimate of 72.8%, the Claims incurred at Rs33.4bn grew 15.7% YoY. Driven by high growth in the Old Motor Vehicle and Group Health segment, the expense ratio (including commission) came in at 28.3% as against our estimate of 30%. Driven by an improvement in expense ratio, the combined ratio at 102.3% came in better than our estimate of 102.8%. Resultantly, better than estimated underwriting performance and investment income resulted in strong 49% YoY growth in PAT to Rs5.8bn vs. our estimate of Rs4.5bn. Motor and Health remain the focus segments The management remains confident of the continued growth trajectory, which is likely to be driven by the

Motor and Health segment.

The company saw slow growth in newvehicle sales during the quarter, but the festive season in coming quarters is likely to drive growth in such sales. Though the company maintains a balanced portfolio in the motor segment, the old-vehicle segment saw a strong 33% growth in Q1FY25 which resulted in improvement in OpEx. ICICIGI recently launched its flagship Retail Health product—Elevate—which includes various industry-first features. The management expects strong growth in the Retail Health segment which is likely to be driven by the product launch and will thus aid in improving the Health mix and overall Health claims ratios. Further, the management indicated its concern regarding high claims frequency in the health segment across the industry.

We reiterate REDUCE with revised Jun-25E TP of Rs1,800/sh To account for the developments during Q1FY25, we have tweaked our FY25-27 estimates resulting in 3-5% increase in GWP and a slight 0.2-0.3ppts improvement in CoR. Resultantly, our PAT estimates increase by 2-7% over FY25-27. The stock has outperformed the broader markets during the past few months resulting in the stock currently trading at FY26E P/E of 31.4x. Given the high valuations, we reiterate our REDUCE on the stock, with revised Jun-25E TP of Rs1,800/sh from Rs1,650 earlier

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