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Motilal Oswal Report
Star Health and Allied Insurance Company Ltd.'s profit jumped 40% YoY in Q4 FY24 to Rs 1.4 billion, in line with our estimate.
The incurred claims ratio came in at 64.1% (360 basis points YoY) versus our estimate of 62.7% in Q4. The expense ratio (including commission) stood at 28.6% versus our estimate of 30%. Hence, the combined ratio came in at 92.8% (in line).
For FY24, net earned premium/profit after tax grew 15%/37% YoY to Rs 129 billion/Rs 8.5 billion and the combined ratio was at 96.7% (versus 95.3% in FY23).
Star Health is expected to increase prices by 15-20% in Q1 FY25 for senior citizen health insurance product and Young Star insurance product. Given the long-term growth potential for the industry, along with investments by Star Health in profitable channels and products, we reiterate our Buy rating on the stock with a target price of Rs 730 (based on 30 times FY26E earnings per share).
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