BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
HDFC Securities Report
The New India Assurance Company Ltd. is India’s largest insurer but continues to make high underwriting losses.
We note that the company’s competitive positioning is weakening and remain concerned about its ability to write profitable business.
The company reported catastrophe losses of Rs 1.5 billion on account of cyclones Nisarga and Amphan.
The company also provided an additional Rs 5.39 billion in respect of increased pension liabilities resulting from lower interest rates. It reported an adjusted profit after tax to Rs 4.2 billion (up 12.9/30.4% YoY/QoQ).
We estimate an FY22E adjusted return on equity of just 5.9% and can, at best, assign a valuation of just 0.7 times FY22E ABV (less 10% discount for an additional 10.4% supply).
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