ICICI Lombard General Insurance Company shares fell sharply after global brokerage house Macquarie has initiated coverage on the stock with Underperform rating.
The stock price closed at Rs 787.85 on the BSE, falling 7.02 percent from previous settlement.
The target price set at Rs 565 per share by the research house is 33.3 percent lower compared to Monday's closing price of Rs 847.30 as current valuations leave no upside for the stock.
It feels the company's business is suffering from underwriting losses (due to intense price competition) despite several catalysts for growth.
Passage of Motor Vehicle Act may boost its profitability but could lower float income, according to the investment firm.
It has large opportunity, but competition is a big pain point, Macquarie feels.
The research house said it expects growth in premium at a compounded rate of 21 percent over the financial years through March 2020, but improving quality is expected to be challenging.
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