Trading ideas: Analyst bets on TVS Motor, Star Health; check targets

Shrikant Chouhan, head of equity research, Kotak Securities, has recommended two stocks today - TVS Motor and Star Health and Allied Insurance.

Trading ideas today: Recommendations by Shrikant Chouhan

TVS Motor: ADD

CMP: ₹3,355  FV: ₹3,925  Resistance: ₹3,410-3,470  Support: ₹3,300-3,230  Domestic two-wheeler demand is expected to maintain its upward momentum in the coming quarters, primarily driven by potential GST rationalization. Within this growing market, TVS Motor is well-positioned to consistently outperform its competitors and secure a larger market share across most product categories. This projected growth and strong market performance will likely be fueled by the company's continuous rollout of new products and its brand positioning strategy.  Market share gain for the company has been driven by the outperformance of scooter and premium motorcycle segments vis-à-vis industry growth (higher mix for TVS Motor) and market share gain in these segments.  The company continued to outperform the market, gaining market share in the export segment with newer product launches.  While export growth momentum is projected to continue into FY27E, it will likely do so at a more moderate pace. This ongoing expansion is primarily supported by a favorable base in Africa alongside steady demand in LATAM, where the company is actively scaling up its distribution network and executing brand activation initiatives. TVS has successfully sustained its leadership position in the electric two-wheeler market, consistently securing a market share of over 25 per cent. This dominant performance is driven by the steady demand for its iQube and Orbiter models.  Looking ahead, the company is expected to further strengthen its market presence through upcoming launches in both the electric two-wheeler and three-wheeler segments, supported by an expansion of its dealership network. A sharp rally in raw material prices poses a cost headwind, but the company can partially mitigate this inflation through few initiatives. First, a depreciating INR will improve profit margins in the export market. Second, targeted reductions in costs will lower manufacturing expenses. Third, the company plans to optimize advertising and promotion (A&P) spends. Finally, strategic price hikes will help offset costs. We have an ADD rating with a fair value of Rs3,925, based on the DCF methodology.

Star Health: BUY

CMP: ₹531  FV: ₹610

Resistance: ₹545-580  Support – 520-500  Star Health and Allied Insurance is India’s largest standalone health insurer, with a dominant position in retail indemnity health insurance supported by a large proprietary distribution network. The company operates with a strong agency-led model complemented by digital and banca channels, covering ~2.8 crore lives with high renewal ratios (~99 per cent).  Its focus on retail health (as opposed to group) provides better profitability, underwriting control, and persistency. 

The company has delivered steady growth with Gross Written Premium (GWP) reaching ₹20,369 crore in FY26, implying ~16 per cent Y-o-Y growth.  Kotak estimates similar ~16–18 per cent GWP growth going forward, driven by retail expansion and pricing actions.  Insurance revenue grew 13 per cent Y-o-Y in FY26, while PAT increased 16 per cent Y-o-Y to ₹911 crore despite lower investment income.  Over the medium term, earnings CAGR is estimated at ~36 per cent, indicating strong operating leverage. 

Profitability metrics have improved after a challenging FY25. Combined ratio moderated to 98.8 per cent in FY26 (vs. 101.1 per cent in FY25), indicating return to underwriting profitability.  Loss ratio improved to ~68.7 per cent, while expense ratio remained controlled at ~30 per cent. Normalized RoE stands at ~13 per cent (vs. reported ~10 per cent), adjusting for mark-to-market volatility. 

Star Health’s model is differentiated by a high share of retail business and proprietary channels (~96 per cent contribution in retail fresh business). The agency network (~700k agents) continues to expand, while digital channels are scaling rapidly (71 per cent growth in digital GWP).  This mix drives better pricing power, lower claims volatility, and superior customer retention. Additionally, wellness and preventive healthcare offerings are gaining traction, improving long-term loss ratios. 

While near-term earnings are impacted by investment volatility (e.g., MTM losses in Q4FY26), core underwriting performance remains strong. Normalized earnings provide a clearer picture of profitability. With RoE expected to improve to ~16–17 per cent and combined ratio trending towards ~96–97 per cent, the company is positioned for steady value creation.  =============================  Disclaimer: This article is written by Shrikant Chouhan, head of equity research, Kotak Securities. Views expressed are his own. Readers' discretion is advised.