New India Assurance Valuation Shifts to Fair Amid Sector Pressure

Valuation Metrics and Market Context

As of 1 Feb 2026, New India Assurance trades at ₹148.00, slightly up by 0.75% from the previous close of ₹146.90. The stock’s 52-week range spans from ₹135.05 to ₹214.75, indicating a significant correction from its highs. The company’s current P/E ratio stands at 20.99, a marked improvement from prior levels that had positioned it as expensive relative to peers. Meanwhile, the price-to-book value has declined to 0.85, signalling that the stock is now trading below its book value, a rarity in the insurance sector where valuations often command premiums.

These valuation shifts are underscored by the company’s EV to EBITDA multiple of 10.59, which aligns closely with the sector average, further reinforcing the notion of fair pricing. The EV to capital employed ratio is notably low at 0.67, suggesting efficient capital utilisation relative to enterprise value. Dividend yield remains modest at 1.22%, consistent with the company’s conservative payout policy.

Comparative Analysis with Industry Peers

When benchmarked against prominent insurance and financial services peers, New India Assurance’s valuation appears increasingly compelling. For instance, Poonawalla Finance trades at a P/E of 92.7 and EV to EBITDA of 23.33, categorised as very expensive. Similarly, Go Digit General and Star Health Insurance command P/E ratios of 58.84 and 61.93 respectively, with EV to EBITDA multiples well above 40, reflecting elevated market expectations for growth and profitability.

Even within the broader financial services universe, New India Assurance’s valuation is conservative. Nuvama Wealth, for example, trades at a P/E of 23.74 and a PEG ratio of 2.13, indicating premium pricing justified by growth prospects. In contrast, New India Assurance’s PEG ratio remains at zero, signalling either flat earnings growth expectations or a lack of consensus on future growth, which may be a factor in its subdued valuation.

Financial Performance and Returns

The company’s return on capital employed (ROCE) is 6.32%, while return on equity (ROE) is 4.03%, both modest figures that reflect the capital-intensive nature of the insurance business and current profitability challenges. These returns lag behind some peers but are consistent with the company’s risk profile and conservative underwriting approach.

Examining stock returns relative to the Sensex reveals a mixed performance. Over the past week, New India Assurance outperformed the benchmark with a 3.24% gain versus Sensex’s 0.90%. However, over the one-month and year-to-date periods, the stock has underperformed, declining 3.24% and 5.1% respectively, compared to Sensex’s declines of 2.84% and 3.46%. The one-year return is particularly weak at -16.6%, contrasting with the Sensex’s 7.18% gain. Longer-term returns over three and five years show positive but modest gains of 26.06% and 16.58%, trailing the Sensex’s robust 38.27% and 77.74% respectively.

Mojo Score and Rating Update

MarketsMOJO assigns New India Assurance a Mojo Score of 34.0, reflecting a cautious stance on the stock. The Mojo Grade was downgraded from Hold to Sell on 3 Nov 2025, signalling concerns over the company’s growth prospects and profitability metrics. The market capitalisation grade is low at 3, indicating limited scale compared to larger insurance players. This downgrade aligns with the company’s subdued returns and modest financial ratios, despite the improved valuation multiples.

Sector Outlook and Investment Implications

The insurance sector remains under pressure due to regulatory changes, competitive intensity, and evolving risk profiles. New India Assurance’s fair valuation presents a potential opportunity for value-oriented investors seeking exposure to a large, established insurer with a diversified portfolio. However, the company’s lower ROE and ROCE, coupled with a lack of earnings growth momentum, warrant caution.

Investors should weigh the stock’s attractive price-to-book ratio and reasonable P/E against its operational challenges and peer valuations. The stock’s recent outperformance relative to the Sensex over the short term may indicate a nascent recovery or market recognition of its improved valuation status.

Conclusion: Valuation Reset Offers Cautious Optimism

New India Assurance Company Ltd’s transition from an expensive to a fair valuation band marks a significant development for investors analysing the insurance sector. The stock’s P/E of 20.99 and P/BV of 0.85 now position it as a more reasonably priced option relative to its historically elevated multiples and expensive peers. While financial returns remain modest and growth prospects uncertain, the valuation reset could attract value investors seeking exposure to a large insurer with a stable franchise.

Given the company’s recent downgrade to a Sell rating by MarketsMOJO and its subdued profitability metrics, investors should approach with measured expectations. The stock’s relative outperformance in the short term may signal early signs of recovery, but longer-term returns will depend on operational improvements and sector dynamics.

Overall, New India Assurance’s valuation shift enhances its price attractiveness, but investors must balance this against fundamental challenges and competitive pressures within the insurance industry.

Unlock special upgrade rates for a limited period. Start Saving Now →