Buy Star Health; target of Rs 730: Motilal Oswal

Motilal Oswal's research report on Star Health

Profit for the quarter stood at INR2.9b, as compared to our estimate of INR1.9b, registering a beat of 49%. Adjusted for gains from reinsurance treaty, PAT came in at INR 2.4b, 24% higher than our estimates. Incurred claims and claims ratio were broadly in line with our estimates. Additionally, STARHEAL plans to implement price revisions for a few products in the current quarter, which accounts for ~10% of the total premium.

Outlook

We have increased our EPS estimates 10%/2.7%/3.9% for FY24/25/26 to factor in higher underwriting profits. Considering the long-term growth potential for the industry, along with investments by STARHEAL in profitable channels and products, we reiterate our BUY rating on the stock with a TP of INR730 (based on 30x FY26E EPS).