ICICI Lombard IPO Recommendations: Subscribe, long term, caution


In the first IPO of non-life insurance player in India, ICICI Lombard IPO opens today for subscription and several brokerage houses and analysts have come up with their recommendations and research reports. Promoted by ICICI Bank, the company is the leading private sector player in general insurance. ICICI Lombard IPO recommendations are mostly positive, although several analysts have pointed out that the offer involves high pricing.

Here is a snapshot of the major recommendations and analyst views.


Arihant Capital Markets has advised its clients to subscribe to the offer. “The issue has been offered in a price band of Rs 651-661 per equity share. At the upper price band of Rs 661 the stock is available at P/BV of 8(x) and P/E of 46(x) based on FY 17 EPS. Based on qualitative pointers and management quality we have “4 star” rating for the issue,” said its research report while noting that the P/BV of ICICI Prudential Life Insurance is at 9.7x.

Motilal Oswal sounded a positive note and recommended a Subscribe rating for long term investment. The brokerage house justified the high valuation on the basis of huge growth potential in non-life segment, leadership positioning, strong solvency margins and consistent ROEs. “We are positive on ICICIL for long term as non-life Insurance sector in India provide huge opportunities for growth due to significantly lower penetration (penetration is 0.77% in India as compared to 1.8% in China, 1.7% in Thailand, 1.7% in Singapore, 1.6% in Malaysia and a global average of 2.8%) and lower insurance density compared to other developed and emerging economies. ICICIL has delivered Premium Income / PAT growth of 11% / 16% in FY13-17. Further the company has delivered strong ROEs in excess of 16% consistently for last 5 years. At upper price band, the issue is priced at P/B of 7.7x (Q1FY18) and PE of 47x (FY17) post issue,” noted analyst Yogesh Hotwani.

Prabhudas Lilladher further added to positive ICICI Lombard IPO recommendations while adding that return ratios are likely to remain strong. “ICICI Lombard’s IPO price of Rs651‐661 implies a valuation of 45.8x‐46.5x on Mar‐17 EPS which is fairly priced in our view. RoE is also expected to remain strong in the range of 18‐20% on high investment income and better operating efficiency. The company too has robust payout ratio; hence we recommend subscribing for long term gains,” analyst opined in the IPO note.

Subscribe for long term is also the recommendation from Way2Wealth. “At the price band of `651-661 the asking valuations for the issue are ~46-47x its FY17 EPS of `14.1/- & ~8x P/BV for FY17. As a macro space we believe insurance sector can witness high growth as awareness of risk cover as well as shift of savings to financial assets accelerates over the next decade. Being a leader in the space & having superior operating metrics we believe the company is well poised to take up the opportunity of increase in penetration over the next few years. We advice investors with a long-term investment horizon to SUBSCRIBE to the issue,” noted the IPO note.

A word of caution came from Choice Broking which has advised investors to subscribe with caution. The brokerage house is of the view that investors can enter in this script at a lower price post listing. “In May 2017, Fairfax Financial Holdings Ltd., one of the largest investor in ILGI, sold 12.2% of its stake to certain private equity firms for Rs. 24.7bn, thereby valuing the firm to around Rs. 200bn. Now at a higher price band of Rs. 661, ILGI is demanding a market cap of Rs. 300bn, which is around 50% premium to the May 2017 deal. We feel that this is unwarranted as there is no major change in the fundamental of the company. Since there is no listed peer for the company, however if we try to compare it with the only listed life insurance company i.e. ICICI Prudential Life Insurance Company Ltd., which is trading at a P/E multiple of 36.6x, this IPO is highly priced with a P/E multiple of 46.8x. Thus considering the above observations, we assign a “Subscribe with Caution” rating for the issue,” noted the research note on ICICI Lombard IPO.

Angel Broking also weighed in with positive ICICI Lombard IPO recommendations. “At the upper price band of `661 the issue is offered at 8x its FY2017 BV. While on the reported numbers it might appear to be fairly valued, we believe with strong potential to deliver high double digit growth for next multiple years, the issue looks decently priced, and hence we have a SUBSCRIBE rating on the issue,” Angel Broking analyst Siddhart Purohit said in the research note.

While ICICI Lombard IPO recommendations are positive, investors might want to go through the IPO discussion page and the grey market page to get latest updates.


  1. ICICI Lombard General Insurance Company Ltd (ICICIL) is a joint venture between ICICI Bank and Fairfax Financial Holdings. It is India’s largest private sector non-life insurer covering – Fire, motor, aviation, health, casualty, home, marine and travel. The company is also involved in reinsurance, insurance claims management and investment management services.

    In FY17, ICICIL had a market share of 8.4% (based on gross direct premium income) and an 18% market share in the private sector non life insurers.


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