Motilal Oswal's research report on Star Health
Star Health (STARHEAL) reported a PAT of INR1.02b in 4QFY23 v/s INR2.1b in 3Q. This was 25% above our estimate fueled by better-than-expected claims and expense ratio. Hence, operating profit came in at INR751m v/s our estimate of INR514m. GDPI grew 14% YoY to INR42b during the quarter. Management has guided for a higher-than-industry growth in premium and an improvement in combined ratio in FY24. The confidence in the guidance stems from: a) price hikes, b) strong growth in benefit-based products within the banca channel, and 3) significant benefits arising from fraud claim detection.
Outlook
We raise our FY24/25 earnings estimates by 3%/6% mainly led by lower expense ratios. These gains were partially offset by weaker-than-forecasted investment performance. Our combined ratio estimates are lower by 30bp/60bp for FY24/FY25 to 93.5%/92.7%. Reiterate BUY with a revised TP of INR720 (based on 36x FY25E EPS).
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