Buy Star Health; target of Rs 520: Motilal Oswal

Motilal Oswal is bullish on Star Health recommended buy rating on the stock with a target price of Rs 520 in its research report dated August 25, 2025.

Broker Research

August 26, 2025 / 12:05 IST

buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Star Health

Star Health (STARHEAL) has reported lower growth than its SAHI peers, which has led to market share loss for the company in the health segment to 11.4% (YTDFY26) vs. 15.7% in FY21. However, we believe that a pickup in fresh premium growth recently should help the company sustain its market share. Its retail health performance has been lower than the industry level due to lower retention after price hikes and intensifying competition, which led to market share erosion. Its exit from group health accounts has lowered the diversification opportunities for the company. Multiple rounds of repricing done last year, along with annual price hikes expected this year, will help in managing the claims ratio. However, the company’s aging back book will keep the claims ratio elevated. STARHEAL’s expense ratios have improved consistently (30.8% in FY25 from 30.2% in FY24), despite strong new business growth. While the commission ratios will remain elevated due to rising share of fresh business (15% in FY26/FY27), operational efficiency will aid improvement in opex ratio (15.4%/14.6% in FY26/FY27).

Outlook

We expect a CAGR of 14%/8% in IGAAP GWP/PAT over FY25-27E, with the combined ratio improving to 98.6% in FY27E. We maintain BUY rating on the stock with a TP of INR520 (valuing the company at 29x FY27E P/E).

For all recommendations report, click here