New India Assurance rally not driven by fundamentals, valuations unjustified- Haitong

Haitong International Securities

07/12/2023 07:42

** The sharp uptick in shares of India's public-sector
insurance stocks, especially New India Assurance Company
 THEE.NS , over the past month is not justified, says Haitong
International
    ** Says the rise in insurance stocks could be due to general
sectoral allocation in financials moving from lending to
non-lending sectors like insurance, after Reserve Bank of
India's move to increase risk-weights for unsecured lending on
Nov. 16
    ** Adds curent valuations of THEE are expensive, while the
earnings in the September quarter were weaker than the industry
peers
    ** Haitong adds there has not been any fundamental material
positive driving the surge in shares
    ** THEE's quarterly results were affected due to losses on
account of floods amounting to 3 bln rupees in second quarter   
    ** Reiterates "Underperform", but hikes target price to 156
rupees from 110 rupees to account for recent rally in shares
    ** THEE shares up 68% since the end of October; Life
Insurance Corporation of India  LIFI.NS  and General Insurance
Corporation of India  GENA.NS  jump 37% and 32% over the period
    
    

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India's insurance stocks surge since the end of October    https://tmsnrt.rs/3GyjZAu
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 (Reporting by Bharath Rajeswaran in Bengaluru)
 ((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))