Jefferies has highlighted Star Health as its preferred pick within India’s health insurance universe, pointing to visible traction in the insurer’s turnaround measures and a favorable earnings path. The brokerage also expressed a constructive view on the health insurance sector overall, noting supportive growth drivers and relatively weaker sensitivity to interest rate cycles than some other financial subsectors.
Valuation metrics cited by Jefferies show Star trading at roughly 17 times its FY28 estimated earnings per share, underpinned by an implied earnings compound annual growth rate of 30%.
Jefferies’ analysis of Star’s regulatory filings and product performance indicates the company’s strategic moves over the last two years - including targeted price hikes, the launch of newer product lines, and a deliberate reduction in the share of employer-employee policies - are beginning to deliver results. The broker notes loss ratios on older, legacy products have declined by about 300-400 basis points, while newer product designs are now representing a much larger share of the insured lives.
Specifically, Jefferies reports that legacy plans such as Family Health Optima and Young Star showed lower loss ratios in FY26 compared with the prior year. At the same time, products launched more recently - cited examples include Health Assure and Super Star - accounted for roughly 40% of lives covered in FY26, a step up from approximately 17% in FY24.
When benchmarked against peers, Jefferies finds Star’s newer offerings are displaying superior claims performance. The brokerage compares a comparable product set - ICICIGI’s Elevate and Star’s Super Star - noting that although both cover similar numbers of lives with similar portfolio vintage, ICICIGI’s comparable product recorded a higher loss ratio of 39% versus 21% for Star’s product.
Claim dynamics at Star in FY26 showed an uptick in claim frequency, yet Jefferies says that development was more than offset by falling claim ticket sizes. The reduction in average claim size was driven by a larger share of outpatient department (OPD) claims and preventive health check-ups within the claim mix. As a result, Star’s claim ticket size in FY26 moved closer to peer averages, compared with being about 50% higher in FY23.
Operational and reputational pressures from claim repudiations have also eased. Jefferies observes improvements in claim repudiation metrics for both Star and competitor Niva across FY26, which it views as reducing brand and regulatory risk.
On the sector front, Jefferies highlights brisk expansion in retail health insurance, with year-over-year growth of about 20% in FY26. The broker attributes much of that acceleration to a goods and services tax waiver that took effect in September 2025. Jefferies expects those growth tailwinds to persist into FY27 as the GST waiver begins to annualize.
Overall, Jefferies’ assessment rests on a combination of improving product mix, margin recovery in legacy portfolios, and a favorable retail demand backdrop—factors it believes justify Star’s top-pick status within the health insurance sector.
Note: The article summarizes Jefferies’ analysis and does not introduce additional data beyond what Jefferies has reported.