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GODIGIT’s Q1FY26 performance was a mixed bag, with elevated CoR at 108.6% (up 3.2ppt YoY; Emkay:103.9%) driven by higher commission ratio, whereas PAT at Rs1.38bn (up 36.5% YoY) was higher than our estimate of Rs1.17bn led by higher investment income. GODIGIT logged a strong 21% GWP growth in the Motor TP segment led by robust growth in the mandatory 5Y 2W policies, thus driving higher commission ratios. Owing to higher cessation and increased share in the Fire segment, GODIGIT’s net retention ratio fell to ~65% during Q1; however, the management expects it to increase to ~80% during FY26. The management continues to favor an opportunistic growth strategy amid a challenging environment. To bake in the Q1 developments, we tweak our FY26- 28 estimates which leads to broadly unchanged CoR and a ~3-6% increase in PAT. We reiterate SELL on the stock and revise-up Jun-26E TP by ~7% to Rs290 (from Rs270).

Higher Commission Ratio drives elevated CoR During Q1FY26, GODIGIT logged 12% GWP growth at Rs29.8bn, largely in line with our estimate. However, lower net retention ratio at 65% (-10.8ppt YoY) resulted in lower NWP at Rs19.5bn (-3.8% YoY) and stood lower than our estimate of Rs26.3bn, driving NEP at Rs18.7bn vs our estimate of Rs21.3bn. Claims ratio at 70.3% saw marginal YoY improvement and slightly missed our estimate of 70%. However, driven by strong growth in the 2W Motor TP segment, commission ratio rose to 29.3% (+3.9ppt YoY) and was significantly higher than our estimate of 25%. Expense ratio at 9% saw 60bps YoY improvement and largely met our estimate. Resultantly, CoR at 108.6% was significantly higher than our estimate of 103.9%. Despite the elevated CoR, PAT at Rs1.38bn (+36.5% YoY) beat our estimate of Rs1.17bn, owing to higher investment income.

Navigating through a difficult external environment for general insurance Amid a challenging environment, the company is still in favor of an opportunistic growth strategy. While the company saw a reduction in the Motor TP business in the earlier quarters, it tracked strong growth in the Motor TP segment on the back of robust growth in the mandatory 5Y 2-wheeler policies which also resulted in higher commission ratios. Further, the pricing improvement in the Fire segment resulted in a strong ~40% GWP growth, though net retention ratio fell during the quarter. Increased competitive intensity and pricing aggression resulted in slowdown in the Group Health segment. The management continues to look for opportunities in the Motor TP segment, while growth in Group Health will revive with the market seeing price discipline.

We reiterate SELL with revised up Jun-26E TP of Rs290 To reflect the Q1 developments, we tweak our FY26-28 estimates which results in broadly unchanged CoR and increase of ~3-6% in PAT led by higher investment income. Given the challenging environment, we see the company’s selective and opportunistic growth strategy causing limitations in delivering superior growth and profitability that can justify the premium valuation at which the stock currently trades. We reiterate SELL on the stock with revised up Jun-26E TP of Rs290 (from Rs270 earlier).

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