ICICI Securities Recommends Buying Star Health and Allied Insurance, Sets Price Target at Rs 644

Star Health and Allied Insurance Sees Steady Earnings Growth

ICICI Securities' latest research report highlights the steady earnings growth trajectory of Star Health and Allied Insurance, driven by a better balance between volume growth and profitability. The company's FY26 results show a 13% year-over-year (YoY) growth in General Equities Portfolio (GEP), a 230 basis points (bps) improvement in IFRS Common Operating Ratio (COR), and a 49% YoY increase in normalized Profit After Tax (PAT) with an 8% yield.

This growth is attributed to several key factors. Firstly, Star Health has experienced strong retail fresh business growth, with a 37% YoY increase in FY26. The company has also made strategic underwriting decisions over the past two years, including reduced group exposure and the repricing of approximately 80% of its portfolio by Q1FY27, along with a calibrated annual repricing strategy. Additionally, Star Health has seen a higher equity Asset Under Management (AUM) mix, increasing from 6.7% in March 2024 to 15% in March 2025 to 18.5% in March 2026, all achieved within the Economic Operating Margin (EOM) limits of 30.5% in FY26.

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The research firm maintains a BUY rating on Star Health with a revised target price of INR 644 (earlier INR 570), based on 22x FY28E EPS of INR 29.3 (earlier 20x on FY28E EPS of INR 28) under IFRS. However, key risks to this outlook include higher competitive intensity or claims denting profitability.