STARHEALTH - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.5

📊 Core Financials Overview

Profitability

ROE: 9.37% and ROCE: 12.0% are modest, reflecting average capital efficiency.

EPS of ₹10.0 supports a P/E of 44.7, slightly above the industry average of 39.8, suggesting mild overvaluation.

PAT surged to ₹263 Cr from ₹0.51 Cr YoY, but QoQ variation is −17.7%, indicating earnings volatility.

Balance Sheet Strength

Debt-to-equity ratio: 0.07 — very low, signaling strong financial discipline.

Book Value: ₹120 vs Current Price: ₹449 → P/B ratio ~3.74, which is reasonable for a growth-oriented insurer.

No dividend yield, consistent with reinvestment strategy.

Cash Flow & Stability

PEG ratio of 1.19 suggests fair valuation relative to growth.

RSI at 54.3 and MACD positive indicate neutral-to-mild bullish momentum.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 44.7 Slightly overvalued vs industry PE

P/B Ratio ~3.74 Reasonable for sector

PEG Ratio 1.19 Fairly valued

Intrinsic Value ~₹400–₹420 Estimated slightly below current price

Star Health is fairly valued, with room for upside if earnings stabilize.

🏥 Business Model & Competitive Edge

Sector: Star Health and Allied Insurance is India’s largest standalone health insurer, offering retail and group health policies.

Strengths

Market leadership in retail health insurance

Strong brand recall and distribution network

Low debt and improving profitability

Challenges

High claims ratio and underwriting losses in prior quarters

FII holding declined (−4.80%), though DII interest rose (+5.64%)

According to Trendlyne’s stock report, Star Health is covered by multiple analysts and has shown improving fundamentals, though volatility remains a concern.

📌 Entry Zone Recommendation

Suggested Entry Range: ₹400–₹420

Below 200 DMA (₹446) and closer to intrinsic value

RSI and MACD suggest consolidation phase

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong brand and sector tailwinds support long-term potential.

Accumulate on Dips: Especially near ₹400 for better margin of safety.

Watchlist Triggers

Consistent EPS growth

Claims ratio improvement

Institutional accumulation

Star Health is a dominant player in a growing sector, but its valuation and earnings volatility call for a measured approach. You can explore deeper insights on TopStockResearch’s fundamental dashboard or Simply Wall St’s valuation analysis.

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