Interested In The Financial Industry? Take A Look At The New India Assurance Company Limited (NSE:NIACL)

The New India Assurance Company Limited (NSEI:NIACL), a IN₨578.65B mid-cap, is an insurance company operating in an industry, which has recently experienced the impact of a softening commercial lines market, a problematic personal lines segment, and a low-yield investment climate. Agility has become the new normal as insurance companies are confronted by a marketplace that is continuously changing drastically. Financial services analysts are forecasting for the entire industry, a strong double-digit growth of 12.89% in the upcoming year , and an enormous growth of 33.16% over the next couple of years. This rate is larger than the growth rate of the Indian stock market as a whole. Should your portfolio be overweight in the insurance sector at the moment? Below, I will examine the sector growth prospects, as well as evaluate whether New India Assurance is lagging or leading its competitors in the industry. See our latest analysis for New India Assurance

What’s the catalyst for New India Assurance's sector growth?

Amid challenges from regulatory disruption, increasing consumer expectations and sluggish sales, insurers will increasingly consider technology integration to drive growth and efficiency. In the previous year, the industry saw growth in the teens, though still underperforming the wider Indian stock market. New India Assurance leads the pack with its impressive earnings growth of 22.81% over the past year. This proven growth may make New India Assurance a more expensive stock relative to its peers.

Is New India Assurance and the sector relatively cheap?

Insurance companies are typically trading at a PE of 41.4x, above the broader Indian stock market PE of 24.73x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry did return a higher 16.74% compared to the market’s 9.65%, which may be indicative of past tailwinds. On the stock-level, New India Assurance is trading at a higher PE ratio of 53.71x, making it more expensive than the average insurance stock. In terms of returns, New India Assurance generated 2.88% in the past year, which is 13.86% below the insurance sector.

Next Steps:

New India Assurance recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. However, this higher growth is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If New India Assurance has been on your watchlist for a while, now may not be the best time to enter into the stock. However, before you make a decision on the stock, I suggest you look at New India Assurance's fundamentals in order to build a holistic investment thesis.

• 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
• 2. Historical Track Record: What has NIACL's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
• 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of New India Assurance? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.