Why is Motilal Oswal bullish on Niva Bupa Health? Sees 29% upside

According to MOFSL, Niva Bupa is well-positioned to capitalise on the rising demand for health insurance driven by a well-established brand, strong distribution network and diverse product portfolio

Niva Bupa Health share price today: Shares of Niva Bupa Health Insurance surged over 11 per cent on Wednesday to hit an intraday high of ₹86.46. Motilal Oswal Financial Services (MOFSL) has initiated coverage on the stock with a 'Buy' rating.  The brokerage has set a share price target of ₹100, which shows an upside potential of 29 per cent in Niva Bupa shares from their last closing price of ₹77.62.  At 10:48 AM on Wednesday, Niva Bupa's stock was quoting at ₹84.90, up 9.38 per cent on the National Stock Exchange (NSE). In comparison, the benchmark Nifty50 index was trading at 24,175.10, up 7.85 points or 0.03 per cent.  On a year-to-date basis, the stock has gained around 2.8 per cent compared to a 1.7 per cent increase in the Nifty50 index. The health insurance company’s total market capitalisation stood at ₹15,403.66 crore. 

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  MOFSL on Niva Bupa share price  

According to analysts at MOFSL, Niva Bupa is well-positioned to capitalise on the rising demand for health insurance driven by a well-established brand, strong distribution network and diverse product portfolio. 

 

"We believe Niva has a strong position to harness the growth opportunity in the health insurance industry, backed by product innovation and customer base expansion. Investments in technology will give results in terms of operational efficiency and better profitability," the brokerage said.

 

Niva Bupa gross written premium  Niva Bupa's gross written premium (GWP) grew at a compound annual growth rate (CAGR) of 34 per cent during the fiscal year 2021-22 (FY22) to 2024-25 (FY25), among the highest in the industry.  It achieved the highest incremental market share in the retail health segment. In retail health GWP, the company witnessed a CAGR of 27 per cent over FY22-25. MOFSL expects the growth momentum to remain strong with GWP estimated to grow at a CAGR of 25 per cent over FY25-28E.   Also Read: Why did Cyient DLM shares zoom 12% on posting Q4 results? Check details    Niva Bupa claim settlement ratio

 

The company recorded a claim settlement ratio of 90 per cent in FY24, one of the best among standalone health insurers, on the back of an efficient claim management process, focus on transparency, quick AI-powered claim settlement, and a high-quality digital healthcare network.

 

Currently, the company holds a market share of 9.4 per cent in the retail health segment, making it the third-largest retail health player in the industry.

  

"On IFRS basis, we expect a CAGR of 27 per cent and 34 per cent in insurance revenue and profit after tax (PAT), respectively, over FY25-28. "We initiate coverage on the stock with a target price of ₹100, based on 40x FY27E P/E on IFRS PAT," the brokerage firm said.   About Niva Bupa Health Insurance Company  Niva Bupa Health Insurance Company Limited is a publicly listed health insurance provider in India, and is traded on major stock exchanges in the country. The company is promoted by Bupa Singapore Holdings Pte. Ltd., a subsidiary of the globally renowned Bupa Group.  

Bupa, which is headquartered in the UK, has over 70 years of expertise in the healthcare industry. With a strong global presence, Bupa serves over 50 million customers across 190 countries.