YES Securities' research report on Star Health Insurance
While claims ratio improved sequentially, more was expected, given historical seasonality but management has guided for improvement: The claims ratio was at 69.2%, up by 511bps YoY but down by -220bps QoQ. On an annual basis, there has been a material rise in claims ratio from 66.5% in FY24 to 70.3% in FY25. This was driven by behavioural changes leading to increased surgical intervention and greater preference for hospitalization. The company is seeing green shoots for new business in terms of loss ratio. There has been a pricing correction for about 60-65% of the retail portfolio and 20-40% price hike for the banca portfolio. The company has also micro-segmented markets and is focusing on profitable ones. Regulatory intervention is also expected. Post the sequential improvement seen, the loss ratio is expected to improve further. The expense ratio without 1/n basis was 29.9% in FY25, which was better than 30.2% in FY24 and more improvement is expected.
Outlook
We maintain BUY rating on Star Health with a revised price target of Rs 475: We value STAR at 24x FY27 P/E for an FY25-27E EPS CAGR of 35%. At our target, the implied FY27E P/B is 3.1x for an 26/27E RoE of 12.1/13.6%.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
