On Friday, Star Health & Allied Insurance (STARHEAL:IN) stock was initiated with a Hold rating by brokerage firm Jefferies, accompanied by a price target of INR550.00.
The firm highlighted Star Health's strong presence in the retail health insurance sector, where it holds approximately a 33% market share, bolstered by the largest agency network in the industry.
The brokerage expressed concerns regarding the ongoing challenges in the industry that could continue to impact the company's profitability. It anticipates that Star Health will maintain an elevated combined ratio, which measures incurred losses and expenses as a percentage of earned premiums, between 97-98%, through the fiscal years 2025 to 2027. Additionally, Jefferies forecasts the return on equity (ROE) for Star Health to remain steady between 11-13% during the same period.
The price target of INR550.00 suggests a valuation at 28 times the projected earnings for September 2026. According to Jefferies, potential increases in retail health insurance volumes or a decrease in competition could pose upside risks to their assessment.
With its extensive network, Star Health's position as a market leader in the retail health insurance space is a significant aspect of its business model. Despite this, the company faces industry-wide challenges that could suppress its profitability in the coming years. The Hold rating and the set price target reflect the brokerage's measured outlook on the stock's potential performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.