Apr'25 View on Star Health & Allied Insurance Company Ltd

Star Health & Allied Insurance Ltd (Star) is India’s first Standalone Health Insurance provider and is the largest private health insurer in India with a market share of 15.8% in the Indian health insurance market in FY21 with leadership in the attractive retail health segment. The Stock after touching from 325 is now just above 20EMA and looks to cross 425 on back of following data Rationale: • High medical inflation and claims frequency continue to weigh in on the performance of Star Health. • Q3FY25 results were also tempered by a change in accounting norms. • While Star Health (and peers) is making prompt tariff hikes, we expect a reduction in claims ratio to take longer than expected. • Industry (retail policy) growth is already sluggish. • We cut estimates, retain REDUCE with an FV of Rs425 (from Rs500). Q3FY25 Earnings Update: Positives: • Co. highlighted that new retail business was up 22% in 9MFY25. • Agency force grew 11% yoy in Q3FY25. Negatives: • Co. reported PAT of Rs220 cr in Q3FY25, down 26% yoy and 11% below our estimates. • The combined ratio remained elevated at 103.3% in Q3FY25 (103.0% in Q2FY25 and 97.8% in Q3FY24). • Co. reported a claims ratio of 71.4% in Q3FY25, significantly higher than 67.7% in 3QFY25