Star Health share price: Buy Star Health and Allied Insurance Company, target price Rs 800: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a call to buy on Star Health and Allied Insurance Company with a target price of Rs 800. The current market price of Star Health and Allied Insurance Company is Rs 708.

Star Health and Allied Insurance Company, incorporated in 2005, is a small capitalization company (having a market capitalization of Rs 40375.76 Crore) operating in the financial services sector.

Major revenue/segments of Star Health and Allied Insurance Company include revenue from insurance products, interest and dividends, and revenue from the sale of stocks and securities for the year ending March 31, 2021 .


For the quarter ended 31-12-2021, the company reported total stand-alone revenue of Rs 2711.01 crore, up 0.07% from last quarter; Total revenue of Rs 2709.24 crore and up by 77.07% compared to the same quarter last year Total revenue of Rs 1531.07 crore. The company reported net profit after tax of Rs -578.37 Crore last quarter.

Investment rationale
The brokerage firm remains optimistic on the overall outlook for Star Health supported by: a) strong retail health growth given its under-penetration, b) healthy earnings growth driven by claims ratio normalization, c) a limited cyclicality risk (commercial insurance and motor insurance have a high cyclicality) and d) a healthy RoE profile (15-17% in the medium term).

In 4QFY22, although premium growth was subdued for the company, it delivered a robust performance with strong loss ratio reduction and improved profitability, the brokerage said, adding that it is maintaining the BUY rating on title with revised TP of Rs 800 (based on 42x FY24E P/E).

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Justin D. O'Neill