ICICI Lombard stock rises 14 per cent after board approves increase in shares

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ICICI Lombard stock rises 14 per cent after board approves increase in shares

Shares of ICICI Lombard General Insurance Company ICICI Lombard rose 14 per cent today after ICICI Bank's board approved an increase in shareholding in the general insurance firm, by up to 4 per cent in multiple tranches, as permissible under applicable law. This will ensure compliance with section 19 2 of the banking regulations Act, 1949, and make ICICI Lombard, a subsidiary of ICICI Bank, subject to receiving necessary regulatory approvals.

In a statement, ICICI Lombard said that ICICI Bank would acquire at least 2.5 percent of the shares in the group, out of the above 4 percent, before September 9, 2024.

The ICICI Lombard stock rose 142.5 per cent to a record high of Rs 1,256. 70 in bse. The stock has risen 3.24 per cent year-on-year in the past three months.

The company had informed the RBI of an extension in the timeline given by the Reserve Bank of India.

The ICICI Bank shareholding in ICICI Lombard General Insurance Company has decreased to less than 30 percent of the company's paid up capital until September 9, 2024. ICICI Bank had a net worth of 48.02 percent at the end of March 31, 2023.

ICICI shares were up 0.55 percent at 955.75 on the BSE.

The shares of ICICI Bank have decreased to 48.02 per cent after being acquired by Bharti AXA, the company said in a statement. As per RBI regulations, ICICI Bank had to reduce the holding to 30 percent by September 2023, but the apex bank extended the timeline to September 2024.

This, Motilal Oswal said, was a key overhang for the ICICI Lombard stock since the acquisition of Bharti AXA in August 2020.

We note that the stock has seen a massive de-rating in its valuations in P E terms to 28 times currently, from 55 times in December 2020, the company said in a statement.

Post-announcement of the merger between HDFC Bank and HDFC, HDFC Life's holding in HDFC Life would have been 48.65 percent.

HDFC Life also underwent a de-rating as well, similar to the reaction for ICICI Lombard stock. In April 2023, the RBI offered relaxation to the HDFC-HDFC Bank merged entity to hold more than 50 percent of HDFC Life's holdings. This sets aheadence for ICICI Bank to enhance its stake in ICICI Lombard, Motilal Oswal, the chairman of the ICICI Lombard, said in a statement.