Niva Bupa shares rally over 11% as Motilal Oswal initiates coverage with 29% upside potential
ADVERTISEMENT Motilal Oswal has initiated the coverage with a 'buy' rating and a target price of Rs 100.
'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,' Motilal Oswal said in its report.
The brokerage firm noted that Niva Bupa has emerged as one of the fastest-growing health insurers, delivering a CAGR of 34% during FY22- 25 and garnering the highest incremental market share in the retail health segment.The analysts at Motilal Oswal expect this growth momentum to stay strong and estimate a CAGR of 25% in gross written premium (GWP) over FY25-28E (Pre 1/n).Niva has a diversified product mix, with retail/group health accounting for 68%/31%
ADVERTISEMENT as of 9MFY25. In the group segment, a one-third contribution comes from corporatesand the remaining from credit-linked products. Consistent innovations and right
ADVERTISEMENT pricing will boost momentum in its retail health segment.Additionally, Niva has undertaken a digital transformation aimed at elevating the customer experience across key touchpoints such as policy management, claims tracking, and telemedicine. These efforts are expected to strengthen the company's market reach, appeal to tech-savvy consumers, lower operational costs, and enhance overall service delivery.
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Also read: ICICI Bank dethrones HDFC Bank on every financial metric. A power shift underway in Indian banking?Niva operates through a well-diversified distribution model, with agents, corporate agents, brokers, and direct channels contributing 30%, 28%, 29%, and 13% respectively to its overall mix in 9MFY25. The company boasts one of the highest agent productivity levels in the industry, while its strong partnerships with brokers, banks, and web aggregators have effectively helped de-risk its distribution base.
ADVERTISEMENT Further, Niva benefits from the leadership of an experienced management team and the strategic backing of global health giant Bupa.This alliance brings underwriting expertise, deep insurance industry experience, and robust distribution capabilities, all of which enhance Niva's financial resilience and long-term growth potential, the domestic brokerage firm noted.Motilal Oswal also stated that it expects the company to report a CAGR of 25% and 32% in pre-1/n GWP and PAT respectively over FY25-28.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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