Jhunjhunwala's Star Health jumps 6% post Q1 results; rerating ahead?
Star Health Q1 review: Nuvama expects corrective actions in the form of selective underwriting and repricing along with scale benefits to reduce CoRs.
- Jul 30, 2025,
- Updated Jul 30, 2025 3:29 PM IST
Shares of Jhunjhunwala family-led Star Health climbed 6 per cent in Wednesday's trade as fresh business growth sustained in the June quarter. Stock analysts said Star Health reported an in line operating performance and that the health insurer contained year-on-year deterioration in claim ratio at 200 basis points, which compared favourably to a steeper decline of 520 basis points in 4QFY25 and 400 basis points each in Q3FY25 and Q2FY25. They foresee a rerating potential ahead.
"We must keep in mind that Q1FY25 itself was weak, and against 1QFY24, the deterioration looks sharp at 420 bps. Opex ratio (EOM to NWP) came in at 32.6 per cent, resulting in a combined ratio of 102.2 per cent, in line JMFe. On a like-to-like basis (without 1/n), combined ratio deteriorated 160 bps YoY as opex ratio cooled off by 40bps. PAT stood at Rs 260 crore, missing JMFe by 6 per cent, led by weak realised investment yield of 6.7 per cent, against JMFe 7.1 per cent," JM Financial said.
A total of 14.10 per cent stake in Star Health is held in the name of late ace investor Rakesh Jhunjhunwala. His wife, Rekha Jhunjhunwala, held another 3.04 per cent stake and is among promoters of Star Health. On Wednesday, shares of Star Health climbed 5.6 per cent to hit a high of Rs 450.65 on BSE.
MOFSL said regulatory changes in the accounting of long-term health policies affected Star Health's revenue growth as well as expense and combined ratios. This brokerage remained optimistic about the overall prospects for Star Health, backed by consistent growth in retail health, given its under-penetration, b) a strong push from the banca channel, and steady growth in specialized products and deepening presence.
"We believe that Star Health can deliver long-term growth with the investments made in profitable channels and products. We may review our estimates and target after the concall on July 30th," it said.
Nuvama expects corrective actions in the form of selective underwriting and repricing along with scale benefits to reduce CoRs. It tweaked estimates, now expecting FY26-28 adjusted PAT to decline of up to 4 per cent and target of Rs 490 against Rs 500 earlier.
Nuvama said the stock is trading at a cheap FY27E PE of 21.3 times. It retained ‘Buy’.
"Including unrealised gains, the annualised yield was strong at ~20%, reflecting substantial MTM gains. As a result, IFRS profits look strong at Rs 440 crore, up 44 per cent YoY. The stock is currently trading at 22x FY27e EPS of Rs 20, which offers a sharp rerating potential should operating performance improve," JM Financial said.
Shares of Jhunjhunwala family-led Star Health climbed 6 per cent in Wednesday's trade as fresh business growth sustained in the June quarter. Stock analysts said Star Health reported an in line operating performance and that the health insurer contained year-on-year deterioration in claim ratio at 200 basis points, which compared favourably to a steeper decline of 520 basis points in 4QFY25 and 400 basis points each in Q3FY25 and Q2FY25. They foresee a rerating potential ahead.
"We must keep in mind that Q1FY25 itself was weak, and against 1QFY24, the deterioration looks sharp at 420 bps. Opex ratio (EOM to NWP) came in at 32.6 per cent, resulting in a combined ratio of 102.2 per cent, in line JMFe. On a like-to-like basis (without 1/n), combined ratio deteriorated 160 bps YoY as opex ratio cooled off by 40bps. PAT stood at Rs 260 crore, missing JMFe by 6 per cent, led by weak realised investment yield of 6.7 per cent, against JMFe 7.1 per cent," JM Financial said.
A total of 14.10 per cent stake in Star Health is held in the name of late ace investor Rakesh Jhunjhunwala. His wife, Rekha Jhunjhunwala, held another 3.04 per cent stake and is among promoters of Star Health. On Wednesday, shares of Star Health climbed 5.6 per cent to hit a high of Rs 450.65 on BSE.
MOFSL said regulatory changes in the accounting of long-term health policies affected Star Health's revenue growth as well as expense and combined ratios. This brokerage remained optimistic about the overall prospects for Star Health, backed by consistent growth in retail health, given its under-penetration, b) a strong push from the banca channel, and steady growth in specialized products and deepening presence.
"We believe that Star Health can deliver long-term growth with the investments made in profitable channels and products. We may review our estimates and target after the concall on July 30th," it said.
Nuvama expects corrective actions in the form of selective underwriting and repricing along with scale benefits to reduce CoRs. It tweaked estimates, now expecting FY26-28 adjusted PAT to decline of up to 4 per cent and target of Rs 490 against Rs 500 earlier.
Nuvama said the stock is trading at a cheap FY27E PE of 21.3 times. It retained ‘Buy’.
"Including unrealised gains, the annualised yield was strong at ~20%, reflecting substantial MTM gains. As a result, IFRS profits look strong at Rs 440 crore, up 44 per cent YoY. The stock is currently trading at 22x FY27e EPS of Rs 20, which offers a sharp rerating potential should operating performance improve," JM Financial said.