Shares of ICICI Lombard General Insurance Company fell 5% to Rs 1,207 in intraday trade on the BSE on Wednesday, despite reporting healthy earnings for the April-June quarter of FY23. The stock has corrected 7% from its opening price of Rs 1,293. In contrast, the S&P BSE Sensex was up 1.4% at 55,515 at 1.47 pm.

The country’s largest private sector general insurer reported an 80% year-on-year rise in net profit to Rs 349 crore in the first quarter of fiscal 2023 on healthy premium income growth. In the same period last year, its net profit reached Rs 194 crore.

The insurer’s total direct premium income for the period stood at Rs 5,370 crore, up 28.2% from last year. The insurer’s underwriting loss narrowed to Rs 193.28 crore in the first quarter of fiscal 2023 from Rs 624.92 crore a year ago. Click here to view the full report

Analysts at HDFC Securities expect loss rates in the health segment to normalise for the remainder of FY23. At the same time, the brokerage also expects an improvement in the auto segment on the back of a rebound in growth.

“We trim FY23E/FY24E earnings by 6%/12% to take into account management’s guidance on the recent increase in the open ratio,” the brokerage said in its earnings update.

Analysts have upgraded the stock to ADD (from REDUCE) with a target price of Rs 1,370 (meaning 32x PE and 5.4x P/ABV at 3/24), given the stock’s sharp pullback and strong demand outlook for auto insurance.

Analysts at ICICI Securities believe that long-term sustainable growth opportunities, market leadership in a diversified product portfolio and digital adoption provide good investment opportunities.

“Leading position in the automotive industry (especially TP) helps improve profitability. Investing in agency channels helps growth in the health segment. The medium-term combined ratio is gradually reduced to help returns. Investing in digital and distribution to strengthen business growth,” the report said. The company said in an earnings update. It maintained a “buy” rating on the stock with a target price of Rs 1,550 per share.