STARHEALTH - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.6

🩺 Star Health and Allied Insurance shows solid capital efficiency and low debt, but high valuation and recent earnings volatility suggest a cautious approach for long-term investors.

📈 Positive

• 💰 Capital Efficiency: ROCE of 12.0% and ROE of 9.37% reflect decent operational performance for an insurance firm.
• 📉 Low Leverage: Debt-to-equity ratio of 0.06 ensures financial stability and low risk.
• 📊 EPS Strength: ₹9.07 supports earnings visibility.
• 📈 Technical Momentum: MACD at 8.72 and RSI at 53.4 suggest neutral-to-bullish sentiment.
• 🏥 Sector Leadership: One of India’s largest standalone health insurers with strong brand recall and distribution network.

⚠️ Limitation

• 💸 Premium Valuation: P/E of 54.7 is significantly higher than the industry average of 44.4.
• 📉 Earnings Volatility: PAT dropped from ₹263 Cr. to ₹54.9 Cr., a 50.7% decline.
• 📉 PEG Ratio: 1.45 suggests valuation may not be fully supported by growth.
• 📉 FII Outflows: FII holdings declined by 0.38%, indicating foreign investor caution.
• 📉 Volume Drop: Current volume is significantly below weekly average.

📉 Company Negative News

• Sharp drop in quarterly profit raises concerns over underwriting margins and claim ratios.
• Stock trading near 52-week high with valuation concerns.

📈 Company Positive News

• Strong brand equity and market share in retail health insurance segment.
• Expansion into tier-2 and tier-3 cities enhances long-term growth visibility.
• Positive MACD crossover and RSI stability suggest technical support near current levels.

🏭 Industry

• Health insurance sector benefits from rising awareness, regulatory support, and increasing penetration.
• Industry P/E of 44.4 reflects moderate valuation norms.
• Peers include ICICI Lombard, HDFC Ergo, and Care Health Insurance.

🧾 Conclusion

• 📉 Entry Zone: ₹455–₹475 could be a favorable accumulation range based on DMA and RSI levels.
• 📈 Long-Term View: Hold with caution; monitor margin recovery and claim ratio trends.
• 🔍 Valuation Watch: Consider phased entry or wait for earnings rebound to justify current price.