Nomura has initiated coverage on India's non-life insurance sector with a positive stance on health insurers, betting that upcoming regulatory reforms and pricing discipline could improve profitability. The brokerage initiated coverage on Niva Bupa Health Insurance Co. Ltd. and Star Health and Allied Insurance Co. Ltd. with Buy ratings, while assigning Neutral ratings to ICICI Lombard General Insurance Co. Ltd. and PB Fintech Ltd.
The brokerage described India's non-life insurance industry as a '21st century's Mahabharat', highlighting intense competition among insurers, hospitals and distributors.
Niva Bupa, Star Health Top Picks
Nomura initiated Niva Bupa with a Buy rating and a target price of Rs 105, calling it a company that is 'winning with quiet confidence.' It expects the insurer to sustain strong growth momentum, forecasting a 23% premium CAGR between FY26 and FY29 and return on equity of 15.9% by FY29.
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The brokerage expects loss ratios to stabilise as renewal policies increase and the company's rule-based underwriting framework and pricing strategy improve profitability.
Star Health also received a Buy rating with a target price of Rs 675. Nomura expects the insurer's strategy of annual repricing, cohort-based pricing and tighter underwriting to make earnings more predictable. It forecasts ROE improving to 12-14.9% over FY27-FY29.
ICICI Lombard, PB Fintech Face Different Challenges
Nomura initiated ICICI Lombard with a Neutral rating and a target price of Rs 1,820. While acknowledging the company's strong market position and consistent profitability, the brokerage believes elevated competition in motor and commercial insurance could limit growth. It expects health insurance to remain the key earnings driver but said the stock's premium valuation leaves limited room for upside without a favourable regulatory trigger.
For PB Fintech, Nomura also started coverage with a Neutral rating and a target price of Rs 1,590. The brokerage noted that the company has rapidly expanded its insurance distribution business, with insurance contributing over 90% of revenue in FY26 and market share tripling over the past four years.
However, it cautioned that pending regulatory reforms governing insurance distributors could materially alter commission structures and business economics. It estimates these reforms could reduce PB Fintech's fair value by as much as 30%.
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