Broker’s call: Star Health Insurance (Buy)

Target: ₹730

CMP: ₹564.70

Profit jumped 40 per cent y-o-y in Q4-FY24 to ₹140 crore, in line with our estimate.

The incurred claims ratio came in at 64.1 per cent (360bp y-o-y) vs. our estimate of 62.7 per cent in Q4. The expense ratio (including commission) stood at 28.6 per cent vs. our estimate of 30 per cent. Hence, the combined ratio came in at 92.8 per cent (in line).

For FY24, NEP/PAT grew 15/37 per cent y-o-y to ₹12,900 crore/₹850 crore and the combined ratio was at 96.7 per cent (vs. 95.3 per centin FY23).

Star Health is expected to increase prices by 15-20 per cent in Q1-FY25 for senior citizen health insurance product and Young Star insurance product.

Star Health has tightened its underwriting standards to focus on high-quality business. We remain optimistic about the overall prospects for Star Health, backed by: strong growth in retail health, given its under-penetration, strong push from the banca channel, sustained growth in specialised products and deepening presence.

Given the long-term growth potential for the industry, along with investments by Star Health in profitable channels and products, we reiterate our Buy rating on the stock with a TP of ₹730 (based on 30x FY26E EPS).