Shares of Niva Bupa Health Insurance Company rose over 2 percent after international brokerage Morgan Stanley initiated an 'equal-weight' call on the recently listed stock. Alongside that, Morgan Stanley set a price target of Rs 88 for the stock, implying a potential upside of 15 percent from Friday's close.
At 09.21 am, shares of Niva Bupa were trading at Rs 77.01 on the NSE.
Touting Niva Bupa as a 'good franchise to play a secular opportunity,' the brokerage thinks the health insurer is well placed to capitalise on the growth offered by India's health insurance industry. "Niva Bupa will be among the few to deliver mid-teens return on equity (RoE) based on IFRS standards, amid intense competition," Morgan Stanley predicted.
Meanwhile, factoring hopes of strong growth for the insurance company, Morgan Stanley expects the firm's combined ratio to improve from 98.8 percent in FY24 to 95.3 percent in FY29, led by its scale expansion.
Furthermore, the brokerage also anticipates a 24 percent gross direct premium CAGR (Compound Annual Growth Rate) for Niva Bupa over FY24-29.
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Shares of Niva Bupa made a muted market debut last month, listing at premium of 6 percent over its IPO price of Rs 74. Since then, the stock has witnessed a rollarcoaster ride, firstly surging nearly 40 percent to a record high of Rs 109.34 in early December, before investors rushed to book profits off the counter, pulling it sharply down. According to Friday's close of Rs 76.27, the stock is trading below its listing price of Rs 78.14.
After its market debut, Niva Bupa also released its earnings for the September quarter, swinging into profit. The company posted a net profit of Rs 13 crore under I-GAAP standards, a notable turnaround from a net loss of Rs 7.6 crore in the same quarter last year.
Under IFRS standards, Niva Bupa’s performance was even stronger, with a net profit of Rs 24 crore, driven by operational improvements and growth in investment income.
The gross written premium (GWP) reached Rs 1,777.3 crore, with the retail health segment playing a key role, achieving a market share of 9.9 percent. Efficiency gains were evident, as the combined ratio improved to 101.3 percent from the previous quarter, while the claim settlement ratio also rose to 91.4 percent.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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