Rekha Jhunjhunwala portfolio: Brokerage initiates coverage on this stock with a ’Buy’ rating

Star Health and Allied Insurance (Star Health) is India’s largest standalone health insurer (SAHI) with a market share of 13% as of 9MFY23 (33% in retail health insurance) with built strong virtuous cycle through its market leadership position in agency network, retail health, and by having one of the largest hospitals networks, highlighted PhillipCapital in a note.

“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. As its loss ratio normalises to pre-covid levels, its combined ratio will improve, driving underwriting performance and profitability. We expect Star Health to deliver a revenue CAGR of 18% over FY22-25 and RoE of 14% in FY25,” the note stated while initiating coverage on the stock with a BUY rating and target price of ₹675 per share.

"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 to capture the long-term growth opportunity in India’s health insurance industry," said PhillipCapital. Key risk, as per brokerage, could be higher agency channel dependency, rising competition, higher than expected loss ratio and regulatory changes.

As per the recent shareholding pattern on the BSE, Rekha Jhunjhunwala holds 3.07% stake in the company whereas late Rakesh Jhunjhunwala holds 14.25% stake in Star Health as of December 2022. Incorporated in 2005, Star Health offers coverage options for retail health, group health, personal accidents and overseas travel insurance.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.