Top life insurers turn bullish on healthcare stocks; investments higher than sector weightage in Nifty 100

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26 Aug, 2025 12:21

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Riding on the buoyant outlook for the healthcare sector, leading life insurance firms tanked up on stakes in the sector stocks including Mankind Pharma, Rainbow Children's Medicare and Star Health in May.

Healthcare stocks were popular choices for inclusion in the portfolios of insurance houses, not only through stake increases but also as fresh entrants.

All verticals of the vast sector that encompasses pharma, hospitals and diagnostics are on the cusp of a strong growth turnaround, according to experts.

The five life insurance firms — ICICI Prudential Life Insurance, Kotak Life Insurance, Tata AIA Life Insurance, HDFC Life Insurance and SBI Life Insurance —added at least one healthcare stock to their portfolios in May, as per Nuvama Research's Insurance Portfolio Analyser.

A bit of healthcare for everyone

With sentiment for healthcare-related stocks on the rise, insurance houses took notice of the opportunities. While easing headwinds and strong domestic market growth are aiding pharma companies, capacity, network and product expansion are expected to do wonders for hospitals and diagnostics majors.

On top of that, the reasonable valuations of the segment in a market that is struggling with expensive pricing are a bonus. Recently, in an interaction with CNBC-TV18, S Naren, Chief Investment Officer of ICICI Prudential Asset Management Company expressed interest in the pharmaceutical sector, saying it offered a rare opportunity as it was on the verge of recovering from the bottom of the cycle.

Laurus Labs, a drug maker and Star Health & Allied Insurance Co, a direct beneficiary of the growing healthcare sector, were two of the three new entrants in ICICI Prudential's portfolio. According to Nuvama's report, SBI Life Insurance added Mankind Pharma to its portfolio while HDFC Life raised its stake in Rainbow Children's Medicare for Rs 156 crore and raised its stake in Max Healthcare.

Tata AIA Life Insurance added Alembic Pharma to its portfolio. According to the report, Kotak Life Insurance raised its stake in Mankind Pharma for Rs 81 crore while reducing its holding in Apollo Hospitals by Rs 65 crore. Poly Medicure was a new entrant to Kotak Life Insurance's portfolio in May.

Life insurers deploy the premium collected from policyholders in different investments for returns.

Sector allocation tops weightage in Nifty 100

Given the positive tailwinds for the sector, life insurers have assigned higher weightage to pharma and healthcare as against the sector’s weightage in the Nifty 100 index.

While pharma and healthcare have a weightage of 3.4 percent in the Nifty 100, four of the five leading life insurance houses have allocated a higher percentage of their holdings to the sector, according to the report. Apart from ICICI Prudential, which has 3.3 percent of its investments allocated to pharma and healthcare, three other insurance houses have gone heavy on the sector.

Also Read: Riches to rags: How the pharma growth story faltered over the decade?

As per the Nuvama report, the pharma and healthcare holdings of SBI Life stand at 4.3 percent, HDFC Life at 6.4 percent, Tata AIA at 5.2 percent and Kotak Life at 5.1 percent of their total allocations.

After being on the sidelines of investor interest over the past several years, the influx of institutional money coming to the sector is seen as a blessing by industry experts.

Hospital stocks in the small-cap segment are also seen as a clear favourite within the sector. Narayana Hrudayalaya and Krishna Institute of Medical Sciences (KIMS) are a part of the top ten small-cap holdings of the five insurance houses.

Investments in Narayana Hrudayalaya worth Rs 376 crore form 0.3 percent of the total assets under management of the five leading life insurers while KIMS enjoys holdings worth Rs 218 crore or 0.1 percent of their total AUM, Nuvama's report reveals. These five houses make up over 75 percent of life insurance AUMs in India.

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.