1. At a Glance
India’s largest standalone health insurer. Massive 31% share in the retail health segment. Strong topline growth, improving profitability — but recent quarters have felt like a fever coming on.
2. Introduction with Hook
Imagine a cricket team that always opens strong but forgets how to bat in the middle overs — that’s Star Health. With over 31% share in India’s retail health insurance and 55% among SAHIs, Star is basically Virat Kohli in his 2016 form… but then someone turned on the injury mode.
- Gross Written Premium (GWP) in FY25 likely to cross ₹22,000+ Cr
- Profit tanked in Q4 FY25 — ₹0.5 Cr net profit vs ₹318 Cr in Q3. Oops.
But is it a one-off stomach bug or something chronic?
3. Business Model (WTF Do They Even Do?)
- Product: Specializes in retail health insurance. Think: individual/family health covers, senior citizens’ plans, critical illness covers.
- Distribution: 850+ branches, 6 lakh+ agents. Offline > Online.
- Differentiator: Pure-play health insurer, not distracted by cars, crops, cows, or cat insurance like general insurers.
- Target Market: Middle India, underserved towns, tier-2/3 cities.
💡 Think HDFC Life, but exclusively for your liver, lungs, and lockdown-induced anxiety.
4. Financials Overview
Profit & Loss (FY25 vs FY24)
| Metric | FY24 | FY25 |
|---|---|---|
| Sales (Premium) | ₹14,022 Cr | ₹16,101 Cr |
| Expenses | ₹12,839 Cr | ₹15,252 Cr |
| Operating Profit | ₹1,184 Cr | ₹849 Cr |
| Net Profit | ₹845 Cr | ₹646 Cr |
| EPS | ₹14.44 | ₹10.99 |
| OPM % | 8% | 5% |
🧠 Growth: 15% YoY in premiums, but operating leverage is weakening.
5. Valuation
| Metric | Value |
|---|---|
| Price | ₹442 |
| Book Value | ₹121 |
| P/B Ratio | 3.65x |
| P/E Ratio (TTM) | 40.3x |
| EV/Sales | ~1.5x (est.) |
Fair Value Range: ₹380 – ₹495
Based on 3.0–3.8x P/B multiple and 18–22x normalized earnings power (after adjusting for one-off loss quarters).
📉 Current price at ₹442 is within fair zone — no alarm bells, no fire sale either.
6. What’s Cooking – News, Triggers, Drama
- Q4 FY25 Earnings Shock: Net profit crashed 99.6% — only ₹0.51 Cr
- AI Tie-up with Medi Assist: June 2025, for fraud detection and faster claims
- IRDAI Push for Health Inclusion: Favourable policy tailwinds
- FII Exit Mode: Shareholding dropped from 35%+ to 13.9% in just one year
- Upcoming Q1 FY26 Results: July 29, 2025 — popcorn ready?
🍿 The stock market may be boring, but Star’s earnings chart isn’t.
7. Balance Sheet
| Particulars | FY25 |
|---|---|
| Equity Capital | ₹588 Cr |
| Reserves | ₹6,524 Cr |
| Borrowings | ₹470 Cr |
| Total Liabilities | ₹20,785 Cr |
| Investments | ₹17,898 Cr |
| Fixed Assets | ₹185 Cr |
Key Takeaways:
- Super asset-light model
- Bulk of capital sits in investments (safe debt/gilt funds mostly)
- Negligible debt = Stress-free CFOs
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Flow |
|---|---|---|---|---|
| FY23 | ₹1,276 Cr | ₹-1,097 Cr | ₹-268 Cr | ₹-89 Cr |
| FY24 | ₹1,310 Cr | ₹-1,177 Cr | ₹23 Cr | ₹156 Cr |
| FY25 | ₹1,379 Cr | ₹-1,151 Cr | ₹-4 Cr | ₹224 Cr |
💡 Healthy operating cash flow. Investing heavily (as all insurers do), funding mostly from internal accruals.
9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 15% | 18% | 12% |
| ROE | 10.6% | 14.4% | 10.0% |
| P/B | 3.4x | 3.6x | 3.7x |
| OPM % | 7% | 8% | 5% |
| Working Cap Days | -255 | -249 | -261 |
📉 Declining returns — worrying trend? Maybe. Or just indigestion from expanding too fast.
10. P&L Breakdown – Show Me the Money
| Year | Sales | Expenses | Net Profit |
|---|---|---|---|
| FY23 | ₹12,096 Cr | ₹11,223 Cr | ₹619 Cr |
| FY24 | ₹14,022 Cr | ₹12,839 Cr | ₹845 Cr |
| FY25 | ₹16,101 Cr | ₹15,252 Cr | ₹646 Cr |
- Stable top-line growth ✅
- Profit growth volatile ❌
- Operating leverage remains under construction
11. Peer Comparison
| Company | Sales (Cr) | ROE % | P/E | PAT (Cr) | Div Yield |
|---|---|---|---|---|---|
| ICICI Lombard | ₹24,755 | 18.8% | 36.3x | ₹2,675 | 0.65% |
| General Insurance | ₹49,617 | 12.7% | 9.0x | ₹7,432 | 2.6% |
| Go Digit | ₹9,371 | 11.7% | 76.8x | ₹425 | 0.00% |
| Niva Bupa | ₹5,374 | 7.3% | 76.5x | ₹213 | 0.00% |
| Star Health | ₹16,101 | 9.6% | 40.3x | ₹646 | 0.00% |
🤺 Star dominates in retail, but lags behind ICICI Lombard in profitability and payout.
12. Miscellaneous – Shareholding, Promoters
| Category | Jun 2024 | Jun 2025 |
|---|---|---|
| Promoters | 57.9% | 58.0% |
| FIIs | 21.6% | 13.9% |
| DIIs | 15.1% | 21.1% |
| Public | 5.4% | 7.0% |
- DIIs gaining confidence
- FIIs clearly ghosting
- Over 2 lakh+ retail shareholders
13. EduInvesting Verdict™
Star Health is a paradox. It’s the uncrowned king of retail health insurance, but its earnings trend feels more like a hospital ECG monitor — full of spikes and crashes.
Great brand? Yes.
Great margins? Sometimes.
Great moat? Probably.
Investor returns? Still under ICU care.
Diagnosis: It’s got the organs. But needs better discipline, cost control, and strategic clarity before the Street prescribes it a clean bill of wealth.
Metadata
Written by EduGPT | 21 July 2025
Tags: Insurance, Health, Financial Services, StarHealth, MidCap, Retail Insurance, Stocks
