Buy Star Health and Allied Insurance; target of Rs 605: ICICI Securities

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Strong fresh business growth in retail, with 36% YoY growth in H1FY27, driven by agency expansion and digital distribution.
  • Strategic underwriting decisions, including reduced group exposure and repricing of ~80% of the portfolio, have led to a 40bps improvement in IFRS COR.
  • Higher equity AUM mix, increasing from 6.7% in Mar'24 to 18.8% in Sep'26, is expected to drive investment income.
  • The company's focus on expanding penetration beyond major cities, with fresh business growth in semi-urban and rural markets being more than three times that in metro and urban markets.

Thesis Validation Checklist

  • Sustained fresh business growth of 20% or more over the longer term, supported by agency expansion and digital distribution.
  • Continued improvement in underwriting performance, with the combined ratio remaining below 100%.
  • Effective management of regulatory changes, including the proposed Public Insurance Registry.
  • Growth in investment income, driven by higher equity AUM mix and yields.
  • The company's ability to maintain its market share and competitive position in the industry.