Earnings Outlook
GST reforms to up Star Health Q3 income, but PAT to fall
This story was originally published at 22:46 IST on 27 January 2026
Register to read our real-time news.Informist, Tuesday, Jan. 27, 2026
By Shweta
MUMBAI – Star Health and Allied Insurance Co. Ltd. is likely to post a double-digit on-year rise in its net premium income for the December quarter, according to brokerages tracking the company. The rise in net premium income is due to growth in the health segment following the exemption from the goods and services tax and the normalisation of the 1/n regulation impact.
The health insurer is expected to report a rise of over 11% on year in its net premium income to INR 42.32 billion for the December quarter, according to the average of estimates from four brokerages. The company's net premium income was INR 38 billion in the year-ago quarter and INR 40.81 billion in the September quarter. The highest estimate for the company's net premium income is INR 43.45 billion by JM Financial Institutional Securities Pvt. Ltd. The lowest estimate is INR 41.54 billion by Motilal Oswal Financial Services Ltd.
The company's gross written premium is expected to see a 19% on-year growth, "driven by increased affordability in health insurance premiums following the GST rate exemption and normalisation of the 1/n regulation impact," Emkay Global Financial Services Ltd. said in a pre-earnings note. The brokerage has estimated the company's gross written premium at INR 45.28 billion against INR 37.96 billion in the year-ago quarter.
The 1/n rule requires insurance companies to spread their long-term insurance premium income over the entire duration of the policy rather than accounting for the entire premium upfront in the first year when the premium is received. The regulation mandated by the Insurance Regulatory and Development Authority of India came into effect from Oct. 1, 2024.
Star Health's net profit for the December quarter is expected to decline nearly 37% on year to INR 1.36 billion, according to the consensus from four brokerages. The estimate, however, reflects a more than two-fold sequential rise in the net profit. The highest estimate for the insurer's December quarter net profit is INR 2.2 billion by JM Financial and factors in improvement in the loss ratio and the impact of base adjustment following the implementation of the new surrender regulations during the reporting quarter. The lowest estimate was INR 726 million by YES Securities (India) Ltd.
The loss ratio is the amount paid out in claims to premiums paid by the policyholders. The latest surrender rules on insurance policies allow policyholders to gain better surrender value after paying the premium for only one year.
Star Health is expected to report an underwriting loss of INR 1.5 billion in the December quarter, narrowing sequentially, according to the consensus from three brokerages. "We expect overall loss ratio to be lower sequentially for Star Health. Hence, we see a sequential decrease in underwriting loss for Star Health," YES Securities said.
The health insurer's claims ratio is estimated at 70.5-70.6% as on Dec. 31, down from over 71% a year ago, according to estimates from two brokerages. The claims ratio will remain elevated due to "increased claims frequency and claims severity," Emkay Global Financial Services Ltd. said in a pre-earnings note. The claims ratio of an insurance company is measured by claims settled versus premiums earned in a given period.
Star Health's combined ratio is expected to marginally improve to 102.4% as on Dec. 31, driven by a slight improvement in its claims ratio, the brokerage said. "Combined ratio is projected to improve, supported by better loss and expense ratios," Motilal Oswal Financial Services Ltd. said.
Star Health, headquartered in Chennai, offers services and products in health, personal accident, and overseas and domestic travel insurance.
The company will report its Oct-Dec earnings Wednesday. The impact of the GST exemption on insurance products will be a key factor to monitor, according to Motilal Oswal.
Tuesday, shares of the company ended flat at INR 425.20 on the National Stock Exchange. The health insurer's shares are down 14% since its September quarter earnings were reported.
All seven brokerage reports on the company available with Informist have a 'buy' or equivalent recommendation on the stock with an average target price of INR 536 per share. This is 26% higher than the current market price.
Following are the December quarter earnings estimates for Star Health and Allied Insurance Co. from four brokerages in descending order of the estimate of net premium interest in INR million:
|
Brokerages |
Net Premium Income |
Net Profit |
|
JM Financial Institutional Securities Pvt Ltd |
43,453 |
2,214 |
|
YES Securities (India) Ltd |
42,532 |
726 |
|
Emkay Global Financial Services Ltd |
41,774 |
1,220 |
|
Motilal Oswal Financial Services Ltd |
41,535 |
1,280 |
|
|
|
|
|
Average |
42,323.50 |
1,360 |
End
Edited by Tanima Banerjee
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