This Private Insurance Stock Can Grow 83%, Hits 52-Week Low Today: 'Buy', Says Emkay Global

Brokerage firm Emkay Global recommends investors to buy the stocks of Star Health. At present, the stock is being quoted at a 52-week low-level today, on June 28. The brokerage firm informs, "On the group side, the company will focus on the profitable SME segment but will reduce its already small exposure to large corporate group health. On retail health, Star Health has reiterated its focus on volume (new policy)-led growth and sees a large demand base in the rural and younger population."

Target Price, Current Market Price

The Current Market Price (CMP) of Star Health is Rs. 515. Emkay Global has estimated a Target Price for the stock at Rs. 945. The stock has the potential to give an 83.5% return, in the upcoming 1 year. This is a large-cap company with a market capitalization of around Rs. 29,669 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 515
Target Price	Rs. 945
Potential 1 year return	83.50%
52 week high share price	Rs. 940
52 week low share price	Rs. 507.15

On the growth front, management remained confident of achieving ~22-24% retail premium growth, driven by the combination of new customer acquisitions and upselling to existing customers. On the profitability front, management is confident of achieving a ~63-65% claims ratio.

Stock advantages and risks: Emkay Global speaks

Star Health and Allied Insurance Company had a meeting on June 23-24 with a large number of FPIs to discuss the company's business performance and growth trajectory and address investor concerns.

Emkay Global stated, "The management thinks that investors remain positive on the retail health insurance business in India, the possible entry of life insurers into health indemnity would only mean a little extra competition and nothing more, and the company should continue to focus on granular distribution rather than relying on any large distributor. Overall, Star Health remains an attractive story in a sunrise sector. In our view, 1-2 quarters of profitable growth delivery will likely lead to a material outperformance of Star Health's shares. The recent steep fall in the share prices provides an attractive entry point. Additionally, with around 12,800 hospitals under its network, Star Health has a reasonably expansive hospital network."

Company profile: Star Health

Commencing operations in 2006 as India's first Standalone Health Insurance provider, Star Health and Allied Insurance Co Ltd is providing sterling services in Health, Personal Accident and Overseas Travel Insurance, etc. Management appeared confident about the company's growth, profitability, and capital position in FY23 and beyond. The turnaround in profitability has already started from Q4FY22. The company has recently announced that it has entered into a bancassurance tie-up with IDFC First Bank, and a few months ago, it entered into a tie-up with Federal Bank. Currently, Star Health has above 12800 employees and more than 640 branch offices all over India. Additionally, with around 50% of its strong 550,000 agency force being less than 3 years vintage, the scope for productivity improvement is substantial.

Disclaimer

The above stock was picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.