Star Health Navigating Growth With Caution, Says Motilal Oswal Maintaining 'Buy'

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Motilal Oswal Report

Star Health and Allied Insurance Company Ltd.’s positioning as the largest retail health insurer is undeniable, but the growth and profitability narrative has weakened in recent quarters.

Retail gross written premium growth has slowed, market share has begun to edge down, and group health remains deliberately under-scaled. The agency-heavy distribution model, which had been a moat in the past, now represents a structural cost burden and a scalability constraint, particularly as customers migrate to banca and digital channels where peers are stronger.

While claims inflation, an aging back book and an elevated commission ratio are likely to create volatility in reported earnings, the repricing of group and retail cohorts should likely offset the impact, along with operational efficiency.

We estimate a CAGR of 14%/28% in I-GAAP GWP/PAT during FY25-27, with the combined ratio improving to 98.6% in FY27E.

We maintain Buy rating on the stock with a target price of Rs 520 (valuing the company at 29x FY27E P/E).

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