Motilal Oswal advised to buy ICICI Lombard
New Delhi. Motilal Oswal has selected one stock in its Sector of the Week report this time. This share belongs to the insurance company. In its report, Motilal Oswal has said that the motor insurance segment is entering a phase of volume-driven expansion, which is being supported by the visible recovery in vehicle demand across two-wheelers, passenger cars and commercial vehicles. Recent tax changes on certain categories, long festive season and improvement in consumer confidence have led to a significant increase in vehicle registrations in the last few months. Has increased. This recovery has increased the pool of insurable vehicles, leading to an acceleration in motor own damage premium growth, especially in two-wheelers and mass-market passenger vehicles where affordability has improved the most.
Growth is visible in the sector
As per industry trends, recovery is visible in all categories. Two-wheelers are at the forefront, helped by high demand in rural areas and easy access to financing, while passenger vehicles are seeing good growth due to continued preference for sport utility vehicles and the introduction of new models. Sales of commercial vehicles have also picked up, supported by increased freight activity, ongoing infrastructure projects and advance purchases made ahead of regulatory changes. Overall, all these factors are translating into strong growth in own-damage premiums, largely driven by new vehicle additions, while the number of renewals has remained broadly stable.
Competitive pressure is very high
Despite supportive demand, competitive pressure remains high. Pricing discipline still remains a challenge as insurance companies compete vigorously by offering discounts on own-damage covers and higher commissions to distribution partners to protect or expand market share. This approach is most evident in highly competitive and price-sensitive segments like two-wheelers and mid-range passenger cars. As a result, premium growth is primarily driven by higher policy volumes and not any significant improvement in pricing or yields.
Which factors are important for the growth of the sector?
Motilal Oswal has said in its report that looking ahead, the growth path of this sector remains supportive due to strong vehicle sales, increasing vehicle penetration and growing digital channels. However, the improvement in underwriting profits is likely to be gradual rather than immediate. In this environment, companies that choose to take risks wisely, have a strong renewal base, manage claims efficiently, and have a disciplined cost structure are better positioned as the industry gradually moves away from a volume-driven phase to more balanced and rational pricing in the medium term.
Which stock to buy?
The share of ICICI Lombard General Insurance is currently at Rs 1953, while the target for it is Rs 2300. That means it can give around 18 percent return from the current price. The brokerage firm said ICICI Lombard remains the largest private motor insurer with 10.7% market share so far in FY26, bolstered by its industry-leading positions in motor own damage (OD) at 13.5% (highest in the industry) and motor third party at 8.8% (highest among private insurers). Motor OD growth in Q2FY26 Industry growth was flat at 6% compared to last year, mainly due to temporary slowdown in automobile sales and strong discounting by public sector insurance companies. However, demand improved significantly with 10% and 12% YoY growth in October'25 and November'25 due to GST cut, festive demand and improved retail sentiment. Apart from motor, ICICI Lombard's strong position in the fire segment following price decline, better discipline in group health pricing, and rising popularity in retail health provides diversification and stability in earnings, further strengthening its strong operating profile amid the improving auto cycle.
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(Disclaimer: The opinion given here regarding the shares is based on the information provided by a brokerage firm. Jagran Business is not giving investment advice. Investing in the stock market is subject to market risks, so please consult a certified investment advisor before investing.)
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