Target: ₹675

CMP: ₹540.30

Star Health and Allied Insurance (Star Health) is India’s largest standalone health insurer with a market share of 13 per cent as of 9MFY23 (33 per cent in retail health insurance). It has built a strong virtuous cycle through its market leadership position in agency network, retail health, and by having one of the largest hospitals networks. All these factors feed each other, creating very strong entry barriers for incumbents and new players, based on which we expect Star Health to remain a dominant player in the retail health space.

Over the years, Star Health has built an enviable agency network that had a market share of 34 per cent in FY22, with best-in-class productivity. As it continues to add new agents and improves the productivity of existing agents, gains in retail GDPI (gross direct premium income) and market share should follow.

As its loss ratio normalises to pre-Covid levels, its combined ratio will improve, driving underwriting performance and profitability.

The virtuous cycle created by a strong agency network, market leadership in retail health, and a large hospital network should continue to help Star Health capture the long-term growth opportunity in India’s health insurance industry.

Key risk: Higher agency channel dependency, Rising competition, higher-than-expected loss ratio and Regulatory Changes