Buy Star Health; target of Rs 690: Motilal Oswal

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Strong retail health growth: Star Health's insurance revenue grew 15% YoY in 2QFY27, driven by 35% YoY growth in retail fresh GWP.
  • Improving claims management: Pricing interventions are yielding results, with improving retail loss ratios and the renewal book operating at a combined ratio below 100%.
  • Investment income growth: Investment income at INR2.7b was 19% above estimates, growing 62% YoY, driven by strong investment performance.
  • Operational efficiency: The company has increased portfolio duration amid higher G-Sec yields, targeting around four years, with scope to extend duration further if yields rise.

Thesis Validation Checklist

  • Monitor retail health growth and market share.
  • Track improvement in claims ratio and combined ratio.
  • Watch for investment income growth and portfolio yield.
  • Assess the company's ability to maintain operational efficiency and scale.