Sell NIACL, target price Rs 100: HDFC Securities

Promoters held 85.4 per cent stake in the company as of June 30, 2020, while FIIs held 0.1 per cent, DIIs 13.4 per cent and public and others 1 per cent.

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NIACL is India’s largest insurer but continues to make high underwriting losses.
HDFC Securities has given sell rating to The New India Assurance Company with a target price of Rs 100. The share price moved up by 0.17 per cent from its previous close of Rs 117.80. The stock’s last traded price is Rs 118.

Investment Rationale
NIACL is India’s largest insurer but continues to make high underwriting losses. The brokerage notes that the company’s competitive positioning is weakening and remain concerned about its ability to write profitable business. It estimates an FY22E adj. ROE of just 5.9% and can, at best, assign a valuation of just 0.7x FY22E ABV (less 10% discount for an additional 10.4% supply). It rates NIACL a SELL with a target price of Rs 100.
NIACL-graph

Promoter/FII Holdings
Promoters held 85.4 per cent stake in the company as of June 30, 2020, while FIIs held 0.1 per cent, DIIs 13.4 per cent and public and others 1 per cent.
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