Star Health Stock Soars! ICICI Securities Issues BUY, Lifts Target to ₹570 – Your Investment Guide!

ICICI Securities has reiterated its BUY rating on Star Health and Allied Insurance, revising its target price upwards to INR 570 per share from the previous INR 512. This upgrade reflects confidence in the company's strong earnings growth trajectory, supported by a favourable balance between business volume and profitability.

The research report highlights that Star Health's initiatives undertaken during FY25 are expected to yield significant results from the second half of FY26. Key drivers for this positive outlook include: * **Robust Retail Growth:** The company has witnessed strong growth in its retail fresh business, showing a 24% year-on-year increase in H1FY26 and an impressive 50% in October 2025. * **Reduced Group Exposure:** Star Health is strategically decreasing its exposure to the group insurance segment, where it experienced a rise in loss ratios. The contribution of group business to Gross Written Premium (GWP) has fallen from 9% in Q2FY25 to 5% in Q2FY26. The loss ratio for this segment improved to 82.1% in H1FY26 from 85.9% in H1FY25. * **Portfolio Repricing:** Benefits are expected from repricing actions taken on 60-65% of the portfolio in mid-FY25, coupled with a calibrated annual repricing strategy. * **Increased Equity Assets Under Management (AUM):** The proportion of equity AUM has grown substantially, rising from 6.7% in March 2024 to 18% by September 2025, which can boost investment income. * **Digital Initiatives:** Several digital measures are in place to improve operational efficiency, as indicated by an Expense Ratio of Mortality (EOM) of 32.3% in Q2FY26 (calculated).

The outlook remains positive, with the revised target price of INR 570 based on a multiple of 20 times FY28 Earnings Per Share (EPS) of INR 28.4 (IFRS). However, potential risks include heightened competitive pressure, an adverse impact of claims on profitability, and possible margin erosion due to Goods and Services Tax (GST) adjustments.

**Impact** This research report provides a positive outlook and a BUY recommendation for Star Health and Allied Insurance, which could influence investor sentiment and trading activity for the company's stock. It offers detailed insights into operational improvements and financial projections, making it highly relevant for investors focused on the Indian insurance sector. Rating: 8/10

**Terms Explained** * **GEP (Gross Earned Premium):** The portion of premium that an insurance company has "earned" over a specific period. It represents the revenue earned for providing insurance coverage. * **IFRS PAT (International Financial Reporting Standards Profit After Tax):** The net profit of a company calculated according to the IFRS accounting standards, which are used internationally. * **YoY (Year-on-Year):** A comparison of a company's performance metrics from one period to the same period in the previous year. * **GWP (Gross Written Premium):** The total amount of premium an insurance company expects to collect over the term of all its insurance policies issued in a given period. * **Loss Ratio:** The ratio of incurred losses (claims paid out) to earned premiums. A lower loss ratio generally indicates better underwriting profitability. * **EPS (Earnings Per Share):** A company's net profit divided by the number of its outstanding shares. It indicates how much profit is allocated to each share of common stock. * **AUM (Assets Under Management):** The total market value of assets that a person or entity manages on behalf of clients. In insurance, this refers to investment funds managed by the insurer. * **EOM (Expense of Management/Operational Efficiency Metric):** This refers to a calculated ratio (32.3% in Q2FY26) that indicates the company's operational efficiency and cost management in relation to its business. A lower ratio generally suggests better efficiency.