Target: ₹750

CMP: ₹637.60

Star Health, the market leader in the Indian Health Insurance industry, with retail market share of 31 per cent, is poised to grow at a relatively faster pace vis-à-vis the overall Health Insurance industry.

Indian health insurance is grossly underpenetrated - the penetration (premium as a percentage of GDP) and density (premium per person) stand at 0.4 per cent and $5, respectively. Relatively, China/the US has penetration of 0.7 per cent/4.1 per cent and density of $66/$2,679.

Only 3.5 per cent of India's population is covered under the retail health insurance plan, and out-of-pocket expenditure is high at 63 per cent (world average of 18 per cent). These statistics indicate a large opportunity for health insurers going ahead.

Standalone health insurance companies (SAHIs) have outperformed in the Retail segment (39 per cent of the overall Health Insurance market), with their market share increasing from 40 per cent to 50 per cent in the past five years. This outperformance has been driven by: a single product focus, which has ensured product innovation; a strong agency network; and a strong association with hospitals. Among the SAHIs, Star Health has seen its market share increase to 32 per cent in 10mFY22 (from 20 per cent in FY18).

In terms of distribution, it has the highest number of agents at 0.53m, with 786 branches. Also, it has tie-ups with 12,000+ hospitals.

Going ahead, we expect Star to report a gross premium CAGR of 25 per cent over FY21-24, going from loss of ₹830 crore in FY21 to PAT of ₹1,080 crore in FY24