ICICI Lombard General Insurance Company Ltd is currently addressing a significant fiscal challenge. The company has been issued a GST show-cause notice worth ₹288 crore for the fiscal year 2020, according to a recent update from CNBC-TV18 on X (formerly Twitter).
Financial Performance Highlights
Despite this regulatory hurdle, ICICI Lombard has demonstrated robust financial performance. In Q4 FY24, the company’s topline increased by 1.29%, while profits surged by 18.89% year-over-year (YoY). This positive trend follows the Q3 performance where revenue grew by 3.13% and profit rose by 20.41%.
Cost Management and Operational Efficiency
ICICI Lombard has also made significant strides in cost management. The Selling, General, and Administrative (SG&A) expenses declined by 22.37% quarter-over-quarter (QoQ) and by a notable 59.48% YoY. Additionally, operating income saw a QoQ increase of 29.87%, despite a YoY decrease of 52.46%.
Share Transactions and Market Movements
In recent market activities, Bharti Enterprises, promoted by Sunil Bharti Mittal, divested shares worth ₹663 crore in ICICI Lombard through open market transactions. This sale involved 38.50 lakh shares, representing a 0.8% stake, sold at an average price of ₹1,722.5 per share.
Prominent institutional investors, including Axis Mutual Fund, Aditya Birla Sun Life Mutual Fund, Invesco Mutual Fund, Morgan Stanley Asia Singapore, Societe Generale, Goldman Sachs Singapore, and Blackstone Aqua Master Sub-Fund, acquired these shares.
Following this transaction, Bharti Enterprises’ stake in ICICI Lombard decreased to 1.63% from 2.43%.
Strategic Moves by ICICI Bank
Simultaneously, ICICI Bank has increased its investment in ICICI Lombard. The bank purchased 21 lakh shares, equating to a 0.4% stake in the insurance subsidiary, for ₹361.72 crore. This acquisition raised ICICI Bank’s holding in ICICI Lombard to 51.7% from 51.27%.
Stock Market Reaction
Shares of ICICI Lombard General Insurance Company showed a positive response, rising by 0.87% to close at ₹1,662.00 per share on the day the transactions were reported.
Conclusion
ICICI Lombard’s ability to navigate regulatory challenges while maintaining strong financial performance underscores its resilience and strategic agility. Investors and stakeholders will be closely watching how the company addresses the GST notice and continues to leverage its financial and operational strengths.