Motilal Oswal's research report on Star Health
Star Health (STARHEAL) reported PAT of INR2.9b in 1QFY24 vs. INR2.1b in 1QFY23. PAT was 19% below our estimate due to a higher-than-expected expense ratio. Thus, operating profit came in at INR2.9b vs. our estimate of INR4b. GDPI grew 20% YoY to INR29b. STARHEAL hikes the price of the Family Health Optima plan (renewal plan), with effect from 1st May’23. The earnings benefits would accrue in 2HFY24. The company has maintained its guidance for a combined ratio to be in the range of 93-95% and claims ratio at 63-65%. The confidence in the guidance stems from: a) price hikes, b) strong growth in benefits-based products in the banca channel, and 3) significant benefits from fraud claim detection. The company will continue to grow faster than the industry in terms of premium.
Outlook
We maintain FY24/FY25 estimates and reiterate our BUY with a TP of INR730 (based on 32x FY25E EPS).
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