Niva Bupa gains 2% as ICICI Securities initiates coverage, 20% upside seen

Niva Bupa Health Insurance share price: Shares of Niva Bupa Health Insurance Company gained over 3 per cent to hit an intraday high of ₹77.10 on Wednesday after ICICI Securities initiated its coverage with a ‘Buy’ rating. The brokerage has set a share price target of ₹90, which shows an upside potential of around 20 per cent from its April 15 closing price of ₹74.57 on the National Stock Exchange (NSE).

 

According to analysts at ICICI Securities, Niva Bupa has delivered a strong CAGR (compound annual growth rate) of 40 per cent between FY20 and FY25 in health insurance premiums. The company’s retail market share has improved from 4 per cent in FY19 to 9.1 per cent in FY24 and 9.4 per cent in the first 11 months of FY25. Moving ahead, the company’s improved scale and assets under management (AUM) should help improve margins and earnings growth. 

 

“The relatively high growth could continue driven by diversified channels which in turn creates positive flywheel on loss ratios, especially when players across the industry including Niva have taken multiple price hikes,” the brokerage said.  READ STOCK MARKET LIVE UPDATES TODAY HERE

 

At 12:30 PM on Wednesday, Niva Bupa’s stock was quoting at ₹76.18, up 2.16 per cent on the National Stock Exchange (NSE). In comparison, the benchmark Nifty50 index was trading at 23,349.40, up 20.85 points or 0.09 per cent. On a year-to-date basis, the stock has surged around 11 per cent compared to a 1.5 per cent decrease in the Nifty50 index. The company’s total market capitalisation stood at ₹13,918.28 crore.

 

According to ICICI Securities, Niva Bupa could benefit from the structural growth of India’s under-penetrated health insurance market given its customer-centric focus, tech-based capabilities and historical growth track record. The company has maintained a decent loss ratio at an average of 58 per cent in the last six years.   ALSO READ | ICICI Prudential jumps 6% after reporting Q4FY25 results, declares dividend

 

Analysts at ICICI Securities expect the company’s earnings to grow at a CAGR of 53 per cent between FY25 and FY27 on the back of high-than-industry growth, improvement in combined ratio and growth in investment yields. 

 

“Under IFRS, we estimate PAT of ₹4.7 billion for FY27E and ascribe a multiple of 35 times to the same to arrive at a target valuation of ₹165 billion. We have given higher valuation multiple of 35 times PE to Niva Bupa to factor in higher than peer earning growth period in the near horizon,” the brokerage said.