Morgan Stanley has initiated coverage on Niva Bupa Health Insurance with an ‘Equal Weight’ rating and a target price of ₹88 (17% upside potential), citing a balanced growth outlook amidst intense industry competition. The brokerage highlights Niva Bupa’s strong positioning to capitalize on the secular growth offered by India’s expanding health insurance market, yet notes that upside potential appears capped.
Morgan Stanley forecasts a 24% compound annual growth rate (CAGR) in gross direct premium income (GDPI) for Niva Bupa over FY24-FY29, translating to a total market share gain of 130 basis points in the health insurance sector. The company’s combined ratio (Indian GAAP, 50:50, pre-1/n accounting) is expected to improve from 98.8% in FY24 to 95.3% by FY29, driven by economies of scale.
The brokerage anticipates a robust 61% PAT CAGR under Indian GAAP, leading to a projected return on equity (ROE) of 18% by FY29. Similarly, under IFRS, it forecasts a 49% PAT CAGR with ROE surpassing 15% by FY29, supported by disciplined execution and operational efficiency. However, Morgan Stanley maintains a cautious stance, suggesting that competitive pressures may limit near-term valuation upside.
