Motilal Oswal Bullish on Star Health Insurance, Targets Share Price at Rs 640

Star Health Sees Improved Performance in Latest Quarter

Star Health (STARHEAL) has reported a 14% year-over-year (YoY) growth in net earned premium to INR43.3 billion, in line with expectations. For the fiscal year 2026 (FY26), the company's net earned premium grew 12% YoY to INR166 billion.

The company's claims ratio improved significantly, decreasing by 440 basis points (bp) YoY to 64.8%, better than Motilal Oswal's estimate of 66.7%. The commission ratio declined by 150bp YoY to 14.2%, lower than the research firm's estimate of 15.9%. Conversely, the expense ratio grew by 160bp YoY to 15.8%, higher than the estimated 13.6%.

A strong underwriting performance contributed to a better-than-expected combined ratio of 94.8%, which improved by 440bp YoY, surpassing Motilal Oswal's estimate of 96.1%.

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Motilal Oswal has retained its estimates for IFRS earnings, citing a strong underwriting performance in the fourth quarter of FY26. The research firm expects IFRS profit after tax (PAT) to post a 32% compound annual growth rate (CAGR) over FY26-28. As a result, Motilal Oswal has reiterated its BUY rating on Star Health with a target price (TP) of INR640, based on 24x FY28E IFRS PAT.