Shareholders might have noticed that ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) filed its third-quarter result this time last week. The early response was not positive, with shares down 7.2% to ₹1,439 in the past week. Revenue of ₹41b beat expectations by an impressive 25%, while statutory earnings per share (EPS) were ₹26.19, in line with estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for ICICI Lombard General Insurance
Taking into account the latest results, the current consensus from ICICI Lombard General Insurance’s 16 analysts is for revenues of ₹135.1b in 2022, which would reflect a meaningful 13% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 26% to ₹39.15. Before this earnings report, the analysts had been forecasting revenues of ₹132.7b and earnings per share (EPS) of ₹39.57 in 2022. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
With the analysts reconfirming their revenue and earnings forecasts, it’s surprising to see that the price target rose 5.8% to ₹1,531. It looks as though they previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic ICICI Lombard General Insurance analyst has a price target of ₹1,819 per share, while the most pessimistic values it at ₹1,027. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ICICI Lombard General Insurance shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Next year brings more of the same, according to the analysts, with revenue forecast to grow 13%, in line with its 14% annual growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.7% next year. So although ICICI Lombard General Insurance is expected to maintain its revenue growth rate, it’s definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple ICICI Lombard General Insurance analysts – going out to 2023, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for ICICI Lombard General Insurance that you need to take into consideration.
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