N V Chandrachoodamani
Chandrachoodamani started his capital market career in mid 2000s with Equity Intelligence India and then worked with several capital market Intermediaries in various roles over the last 15 years. Most of his career experience has been in equity research and PMS. Most recently, he was with MOAT, a PMS firm. He is a graduate in mathematics, a post graduate in finance, and holds a CFP certification. LinkedIn|Twitter
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4 thoughts on “Prime stocks update: An exit call on an insurance stock”
Looks like both buy call as well as sell call have come too soon even before the theory holds out in long term!!! Such short term buying and selling should not be part of your recommendation at all.
Welcome your comment sir,
As written in the update, the call is not because of any problem with the business/ Co per se.
It remains one of the best Cos in the general insurance space
Earnings recovery is not happening as expected and may happen with more lag.
If a correction takes valuations lower by 15-20%, we may revisit the stock, otherwise when earnings growth picks up
Thank you
I am too surprised by your exit call. Insurance is a decadal story. Earnings of the Co has shown healthy CAGR in the last decade. So, my question is if the Co has the potential to grow it’s earnings at 12% or more in the long term. If so, does it make sense in exiting and revisiting at a 15-20% lower price in the backdrop of there being no issues with the Co as stated by you.
Welcome your query sir
Earnings growth has flattened out after FY21. We were expecting a recovery post Covid. Though that is happening in “INCOME”, it is not translating to “PROFIT” due to competitive pressures. This competitive intensity can continue for some more time as per management and valuation is also not cheap.
So, our thought is to look at it again either when valuation becomes cheap or when signs of “PROFIT” growth emerge
This also has to do with poor industry dynamics where others are making higher losses as reflected in the elevated combined ratios (refer our update).
So, if they wake up and decide to increase premiums and do business profitably, that can bring more stability to industry and reduce competitive intensity.
We will be closing watching the developments and take a call later
Thank you
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