Summary
Go Digit General Insurance Limited - Q3 FY2026 Earnings Call Summary Thursday, January 22, 2026, 4:00 PM IST
Event Participants
Executives 1 Kamesh Goyal (Chairman)
Analysts 5 Ansuman Deb (ICICI Securities), Mehak (Emkay Global Finance), Nidhesh (Investec), Sanketh Godha (Avendus Spark), Shobhit Sharma (HDFC Securities), Supratim Datta (Jefferies)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| GDPI | ₹2,557 crores | +20.9% YoY; growth across all lines despite exiting some government health business. |
| GWP | ₹2,909 crores | +8.7% YoY; growth moderated by decision to not renew ₹216 crores of low-priced govt health business. |
| Profit Before Tax | ₹163 crores | +37% YoY; adjusted for one-time ₹7 crore wage code impact, growth would have been 43%. |
| Profit After Tax | ₹140 crores | +17.6% YoY; effective tax rate at 14% for FY26 (expected to rise to 25% in FY27). |
| Combined Ratio (IFRS) | 105.0% | -120 bps YoY; reflects consistent underlying operational improvement on a net earned basis. |
| Combined Ratio (IGAAP) | N/A | Management cited IGAAP COR as “illogical” due to lack of DAC deferment and upfront RI commission. |
| Loss Ratio (Motor OD) | 75.6% | +510 bps vs Q4 FY25; driven by price competition and higher renewal book mix in private cars. |
| AUM | ₹22,509 crores | +18.8% YoY; first time crossing the ₹22,000 crore milestone. |
| Solvency Ratio | 230% | Well above regulatory 150%; provides buffer for increased risk retention or equity allocation. |
| Advanced Premium (Motor) | ₹2,605 crores | 7.9% of YTD motor premium; highest in industry, primarily driven by two-wheeler portfolio. |
Geographic & Segment Commentary
- Motor: Segment mix reached 66% of total business. Driven by 47% growth in two-wheeler collected premium (₹668 crores) following GST reductions. Commercial Vehicle (CV) mix hit an all-time low of 19% as management pivoted away from competitive pricing.
- Health, Travel, & PA: GWP de-grew 31% YoY. This was a strategic choice to exit ₹254 crores of government health business (inward facultative) due to inadequate pricing. Excluding this, GWP growth would have been 18.5%.
- Fire & SME: Fire segment saw growth substantially higher than the industry. Management utilized strengthened premium rates in this segment to gain market share while maintaining profitability.
Company-Specific & Strategic Commentary
- IFRS Reporting Transition: The company has officially moved to reporting Combined Ratio on IFRS (Net Earned Premium) basis to eliminate the “artificial” volatility of IGAAP commission accounting. Pre-tax DAC stands at ₹2,403 crores.
- Reinsurance Strategy: For the first time, Digit entered a motor reinsurance treaty on a funds-withheld basis to protect against “tail risk” in Electric Vehicles (EVs), specifically total loss risks during urban flood events.
- Operational Efficiency: Management expenses remain “best-in-class” at 7.0% of GWP, significantly lower than the industry average of ~9.5%, credited to continuous tech investment.
- Capital Allocation: Equity allocation increased to 7.4% of AUM (from ~3.5% a year ago). Management has predefined levels to increase this further if market opportunities arise.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Tax Rate | 25% starting FY27 | Current 14% rate is due to exhaustion of accumulated losses; normalizing next fiscal. |
| Combined Ratio | Directional Improvement | Corrective pricing actions in Motor OD taken in Oct/Jan are expected to stabilize ratios in 2 quarters. |
| Growth Ambition | Outpace Market | Aims to grow faster than industry in segments with adequate pricing; no specific numerical targets provided. |
Risks & Constraints
| Risk | Context |
|---|---|
| Motor OD Pricing | Intense competition and lower average ticket sizes have pressured OD loss ratios, particularly in private cars. |
| EV Loss Severity | EVs show higher total-loss vulnerability during flood events (e.g., Chennai/Kolkata) compared to ICE vehicles. |
| Regulatory (EoM) | Non-compliance with 30% Expense of Management (EoM) limits persists due to a retail-heavy mix; management advocates for segment-wise limits. |
| GST Exposure | Management flagged potential GST risks for peers using innovative reinsurance commission structures to bypass EoM limits. |
Q&A Highlights
Motor OD Pressure
- Question: What is driving the increase in Motor OD loss ratios? (Shobhit Sharma)
- Answer: It is a combination of falling average ticket sizes due to competition and a high share of renewals. Corrective pricing was implemented in October and January to address this (Kamesh Goyal).
Electric Vehicle Tail Risk
- Question: Why did you increase motor reinsurance if you have best-in-class underwriting? (Supratim Datta)
- Answer: This is specifically for tail-risk protection in EVs during floods. EVs have higher total-loss ratios in floods. The treaty is on a “funds withheld” basis, so investment income is unaffected (Kamesh Goyal).
Two-Wheeler Dynamics
- Question: How does the high volume of two-wheelers impact the P&L? (Sanketh Godha)
- Answer: Two-wheeler growth was 47% in Q3. Because commissions are expensed upfront in IGAAP but premium is earned over 1-3 years, this growth impacted Q3 P&L by ₹84 crores (Kamesh Goyal).
Expense of Management (EoM)
- Question: What is the status of EoM compliance? (Mehak)
- Answer: Digit’s management expenses are the lowest at 7%, but the high retail/motor mix pushes total EoM up. If measured on a segment-wise basis (like peers with large group health books), Digit would be fully compliant (Kamesh Goyal).
Key Takeaway
Go Digit delivered a resilient Q3 FY26 with a 37% jump in PBT to ₹163 crores, despite choosing to exit ₹216 crores of low-margin government health business. The quarter was characterized by a massive 47% surge in the two-wheeler segment (₹668 crores collected premium), which, while weighing on IGAAP optics due to upfronting of acquisition costs, improved the IFRS combined ratio to 105.0%. Strategically, the company has pivoted away from Commercial Vehicles (now at a record low 19% of motor mix) and implemented tail-risk reinsurance for its growing EV portfolio. With a robust solvency of 230% and AUM crossing ₹22,500 crores, Digit is positioned to increase risk retention and equity exposure. Management remains focused on shifting the narrative to IFRS-based reporting to better reflect the underlying profitability of its long-term retail books as they look toward a normalized tax regime in FY27.
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