Buy Star Health; target of Rs 700: Emkay Global Financial

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Star Health's claims ratio has improved for the fifth straight quarter, driven by a turnaround strategy implemented a few quarters ago, including portfolio recalibration, risk-based pricing, and wellness initiatives.
  • The company's combined ratio has also improved, driven by a lower claims ratio, and the expense ratio has witnessed an improvement of 20bps.
  • Management believes the turnaround in claims ratio is structural and expects to sustain fresh business growth of >20%.
  • The company's focus on improving combined ratio and ROE is expected to drive long-term growth.

Thesis Validation Checklist

  • Investors should watch for continued improvement in claims ratio and combined ratio over the next 12 months.
  • Fresh business growth and retention rates will be key indicators of the company's ability to sustain its growth momentum.
  • Any changes in regulatory policies or market conditions that could impact the company's operations and profitability should be closely monitored.
  • The company's ability to maintain its expense ratio and improve its operating efficiency will be crucial in achieving its long-term goals.