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IIFL Securities report on Star Health

Star Health (STAR) reported 3% yoy growth in GWP during 4Q (~+8% yoy excluding the impact of the new 1/n accounting policy for long term policies). PAT for the quarter stood at Rs5.1mn, with the decline attributable to lower investment income due to lower capital gains being booked, coupled with an increase in combined ratio. During FY25, STAR has taken a price hike in six of its products, which contribute to ~60% of its GWP. The FY28 aspiration to double GWP to Rs300bn and record a PAT (as per IFRS) of Rs25bn remains intact. We largely maintain our EPS estimates for FY26ii/FY27ii and expect STAR to grow its GDPI/EPS at 14%/27% Cagr over FY25-27ii, augmented by an easy base.

Outlook

STAR’s efficient cost structure and re-pricing strategy could potentially offset the headwinds of rising medical inflation and disease incidences, although we expect the recovery in loss ratios to be gradual. Our 12-mth TP is unchanged at Rs 500, still implying 28% potential upside. Maintain BUY.

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Star Health - 02052025 - iifl

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