Niva Bupa Stock Analyzed by JM Financial
JM Financial Institutional Securities has recently given Niva Bupa stock a “Buy” recommendation, suggesting the stock will likely increase in value. They’ve set a target price of ₹88 per share, which is 10% higher than the current price. This recommendation is based on their analysis of the company’s potential.
Key Points
- JM Financial rates Niva Bupa as “Buy” with a target price of ₹88.
- The brokerage values Niva Bupa at 35 times expected earnings.
- Niva Bupa is the third largest health insurer in India.
- Growth is expected to accelerate driven by increased adoption of health insurance.
- Regulatory changes, including GST cuts, will improve insurance affordability.
- Diversified distribution and banca relationships will fuel Niva Bupa’s growth.
The analysis highlights that Niva Bupa’s success relies partly on its varied sales approach. The company has a strong network built through relationships with banks and brokerage firms, along with a direct sales channel. Because of this broad reach, JM Financial anticipates Niva Bupa will maintain its market share even if regulations change how agents work.
Health insurance is still growing, and JM Financial believes this trend will continue. They predict that growth will pick up again after a period of slower expansion. In FY24, 570 million people have health insurance, which generated ₹1.2 trillion in premiums (an average cost of ₹2,000 per person). Experts project that health insurance sales will increase by 20% each year for the next few years.
Health insurance has grown rapidly in the past decade, growing at a rate of 19% compared to 13% for general insurance and 11% for the overall economy. The company’s growth is fueled by both individual coverage and by people adding extra insurance on top of government health programs.
Other health insurance companies have strengths and weaknesses. Star Health has a strong base of loyal customers, but is reducing its focus on some areas. Companies that handle insurance claims (TPAs) face challenges in finding enough customers. Niva Bupa’s mix of different types of insurance and its strong relationships with banks give it a significant opportunity for growth.
Changes in how insurance companies report their earnings will also impact Niva Bupa. Starting in 2024, the company will need to account for the fact that some policies are paid for over many years. This can make it appear that growth is slowing down, but the company expects things to return to normal in 2025. The government is also making changes to the tax rules for insurance, which will make insurance more affordable for customers.
Overall, JM Financial sees a positive future for Niva Bupa, driven by growing demand for health insurance and the company’s strategic advantages.
Insurance growth is a key indicator of long-term financial health and societal well-being.
