Buy This Mid Cap Insurance Stock, Shares Likely To Give 33% Returns, Says ICICI Securities

ICICI Securities recommends a "buy" Star Health and Allied Insurance Company Limited with a target price of Rs 805/share. Considering the given target price if the stock is purchased at the current market price it could fetch a potential upside of 33%.

Star Health is India's first Standalone Health Insurance provider and the country's largest private health insurer. It is a mid-cap insurance company with a market capitalisation of Rs 35,000.96 crore.

Stock Outlook & Returns

The stock of Star Health last traded at Rs 607.55/share on NSE, 2.34% down from its previous close. Its 52-week high level is Rs 940 which it recorded on 10 December 2021 and its 52-week low level is Rs 469.05, which it recorded on 1 July 2022, respectively. Since its listing on 10 December 2021, the stock has fallen 33%, giving a negative return. It has fallen 5.44% in a week, 13.61% in a month and 19.49% in 3 months, respectively.

Structural capabilities put business in an advantageous position

Beyond the retail under-penetration driven growth story, we appreciate the operationally intensive nature of health insurance business from the perspective of claims management, engagement with agency channel and workflow running with the network hospitals. This makes health insurance relatively high entry barrier business and Star Health (STAR) has developed structural business capabilities in the same. 

Key elements of Star Health's strategy revolve around improving and expanding distribution of health insurance, claims management and product offerings. The strategy includes: 1) deepening penetration in rural areas, 2) expanding use of alternate distribution channels, 3) robust and efficient claims management, 4) strengthening agency distribution, 5) offering innovative and customised products, 6) leveraging the company's leading position in the market, and 7) large-scale technology transformation to reduce costs and increase customer satisfaction. 

"We maintain BUY with the unchanged target price of Rs 805 based on 40x FY24E EPS of Rs20.1," the brokerage said. 

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.