HDFC Securities Recommends Buy This Midcap Insurance Stock, Sees 40% Potential Gains

Leading brokerage firm HDFC Securities has come up with a "Buy" recommendation on Star Health and Allied Insurance Ltd. (STARHEAL), an insurance sector midcap company. The brokerage assigns a target price of Rs 795/share on the stock, claiming a potential upside of 40% from the current market price. The company provides services in Health, Personal Accident and Overseas Travel Insurance etc. It has a market capitalisation of Rs 33.056.72 crore.

Stock's Performance and Outlook

The last trade price of the stock on NSE is Rs 568.30/share, up 2.66% compared to the previous close. Its 52 week low is Rs 469.05/share and 52 week high is Rs 780/share, respectively. The stock has fallen 37.33% since 10 December 2021, its listing date.

It has given 7.84% positive return in 1 week. In 1 month, it declined 2.35% and in 3 months it declined 2.98%, respectively. In 1 year, the stock declined 24.53%.

Disciplined approach to drive profitability, Buy for a target price of Rs 795/share

HDFC Securities said, "We attended STARHEAL's analyst day where the management showcased its policy underwriting and claims management processes and articulated its focus on incrementally raising persistency post the recent price hike in its flagship product. We like STARHEAL for its strong moats, including a dominant agency-led distribution network, retail business mix, and best-in-class opex ratios."

It added, "We expect STARHEAL to deliver revenue/APAT CAGRs of 21%/26% and RoEs in the range of 14.7-16.8% over FY23-FY25E; maintain BUY with a target price of INR795 (DCF derived multiple at 44x Sep24E AEPS and 6.8x Sep24E P/ABV)."

Disclaimer - The stock has been picked from the brokerage report of HDFC Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.