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Time of India
3 days ago
- Business
- Time of India
India's health insurance sector faces growth and profitability challenges: Report
New Delhi: India 's health insurance industry, which was earlier considered a strong and steady growth story, is now facing serious structural challenges. A recent report by Elara Capital has highlighted that both growth and profitability in the sector are being affected, which may redefine the long-term potential of health insurers in the country. It said, "India's health insurance industry, long seen as a secular growth story, is facing structural constraints in terms of growth as well as profitability". According to the report, one of the key reasons behind this slowdown is the overestimation of the total addressable market (TAM) for private insurers. Many experts had earlier projected a large market for private health insurance. However, with the expansion of government-sponsored health schemes that offer widespread coverage, the actual market available for private players has reduced. This has made it more difficult for private insurers to grow at the pace previously expected. At the same time, increasing competition in the sector is adding more pressure. The report noted that factors such as a shift in policy mix toward older or vintage policies and the growing bargaining power of hospitals and insurance distributors are affecting the profitability of health insurance companies. These trends are putting a cap on the margins of insurance manufacturers. The report also pointed to the entry of LIC into the health insurance segment, along with other life insurance companies that are expected to enter through composite licenses. This will further intensify competition and could limit growth opportunities for traditional standalone health insurers (SAHI). Due to these challenges, the report advised investors to lower their long-term expectations for broad-based growth in the health insurance sector. Instead, they should focus on more resilient areas such as third-party administrators (TPAs) and diversified multi-line private general insurers, which tend to have stronger business models and better profitability. Another concern is the rising cost of claims. The report explained that after COVID-19, there has been a shift in focus toward critical illnesses like cancer and heart conditions. This has led to higher claim frequency and severity, putting additional pressure on insurers. Loss ratios remain high, and the situation is worsened by increasing hospital occupancy, which has gone up from 52 per cent in FY21 to 64 per cent in FY25. Along with this, the average revenue per occupied bed (ARPOB) has grown at a compound annual growth rate (CAGR) of around 10 per cent, further driving up the cost of claims. In summary, the report highlighted that India's health insurance sector is going through a structural change. While traditional players may face limited growth, new opportunities exist in niche segments with better economics.
India Gazette
3 days ago
- Business
- India Gazette
India's health insurance sector faces growth and profitability challenges: Report
New Delhi [India], June 2 (ANI): India's health insurance industry, which was earlier considered a strong and steady growth story, is now facing serious structural challenges. A recent report by Elara Capital has highlighted that both growth and profitability in the sector are being affected, which may redefine the long-term potential of health insurers in the country. It said, 'India's health insurance industry, long seen as a secular growth story, is facing structural constraints in terms of growth as well as profitability'. According to the report, one of the key reasons behind this slowdown is the overestimation of the total addressable market (TAM) for private insurers. Many experts had earlier projected a large market for private health insurance. However, with the expansion of government-sponsored health schemes that offer widespread coverage, the actual market available for private players has reduced. This has made it more difficult for private insurers to grow at the pace previously expected. At the same time, increasing competition in the sector is adding more pressure. The report noted that factors such as a shift in policy mix toward older or vintage policies and the growing bargaining power of hospitals and insurance distributors are affecting the profitability of health insurance companies. These trends are putting a cap on the margins of insurance manufacturers. The report also pointed to the entry of LIC into the health insurance segment, along with other life insurance companies that are expected to enter through composite licenses. This will further intensify competition and could limit growth opportunities for traditional standalone health insurers (SAHI). Due to these challenges, the report advised investors to lower their long-term expectations for broad-based growth in the health insurance sector. Instead, they should focus on more resilient areas such as third-party administrators (TPAs) and diversified multi-line private general insurers, which tend to have stronger business models and better profitability. Another concern is the rising cost of claims. The report explained that after COVID-19, there has been a shift in focus toward critical illnesses like cancer and heart conditions. This has led to higher claim frequency and severity, putting additional pressure on insurers. Loss ratios remain high, and the situation is worsened by increasing hospital occupancy, which has gone up from 52 per cent in FY21 to 64 per cent in FY25. Along with this, the average revenue per occupied bed (ARPOB) has grown at a compound annual growth rate (CAGR) of around 10 per cent, further driving up the cost of claims. In summary, the report highlighted that India's health insurance sector is going through a structural change. While traditional players may face limited growth, new opportunities exist in niche segments with better economics. (ANI)
Time of India
3 days ago
- Business
- Time of India
India's health insurance sector faces growth and profitability challenges: Report
New Delhi: India 's health insurance industry, which was earlier considered a strong and steady growth story, is now facing serious structural challenges. A recent report by Elara Capital has highlighted that both growth and profitability in the sector are being affected, which may redefine the long-term potential of health insurers in the country. It said, "India's health insurance industry, long seen as a secular growth story, is facing structural constraints in terms of growth as well as profitability". According to the report, one of the key reasons behind this slowdown is the overestimation of the total addressable market (TAM) for private insurers. Many experts had earlier projected a large market for private health insurance. However, with the expansion of government-sponsored health schemes that offer widespread coverage, the actual market available for private players has reduced. This has made it more difficult for private insurers to grow at the pace previously expected. Live Events At the same time, increasing competition in the sector is adding more pressure. The report noted that factors such as a shift in policy mix toward older or vintage policies and the growing bargaining power of hospitals and insurance distributors are affecting the profitability of health insurance companies. These trends are putting a cap on the margins of insurance manufacturers. The report also pointed to the entry of LIC into the health insurance segment, along with other life insurance companies that are expected to enter through composite licenses. This will further intensify competition and could limit growth opportunities for traditional standalone health insurers (SAHI). Due to these challenges, the report advised investors to lower their long-term expectations for broad-based growth in the health insurance sector. Instead, they should focus on more resilient areas such as third-party administrators (TPAs) and diversified multi-line private general insurers, which tend to have stronger business models and better profitability. Another concern is the rising cost of claims. The report explained that after COVID-19, there has been a shift in focus toward critical illnesses like cancer and heart conditions. This has led to higher claim frequency and severity, putting additional pressure on insurers. Loss ratios remain high, and the situation is worsened by increasing hospital occupancy, which has gone up from 52 per cent in FY21 to 64 per cent in FY25. Along with this, the average revenue per occupied bed (ARPOB) has grown at a compound annual growth rate (CAGR) of around 10 per cent, further driving up the cost of claims. In summary, the report highlighted that India's health insurance sector is going through a structural change. While traditional players may face limited growth, new opportunities exist in niche segments with better economics. Economic Times WhatsApp channel )
Time of India
3 days ago
- Business
- Time of India
New launches to drive Sun Pharma's future growth; PAT may take a hit by tax surge
Sun Pharmaceutical Industries has underperformed the BSE Healthcare index over a one-month and three-month periods amid the likely pressure on profitability in the coming quarters. While the company expects to retain the revenue growth momentum for FY26 after clocking 8% growth in FY25, its plan to spend over $100 million in marketing and promotion of specialty products is expected to dent profitability for the current fiscal year. Analysts have slashed FY26 EPS targets by 3-8%. The company's net profit fell by 19% year-on-year to Rs2,149.9 crore for the March quarter due to higher tax outgo. Revenue grew by 8% to Rs12,958.8 crore. The tax expense for the quarter was Rs1,093.7 crore compared to Rs148.9 crore a year ago. The company expects the tax expense to increase further in FY26, due to exhaustion of tax loss from previous accounting periods. The operating margin before depreciation and amortisation (EBITDA margin) improved to 28.7% in the March 2025 quarter from 25.3% in the year-ago quarter. For the full year, the company's revenue and net profit grew by 9% and 14% to Rs52,041.3 crore and Rs10,929 crore respectively. The research & development (R&D) expense was Rs3,248.4 crore for FY25, representing 6.4% of sales. It is expected to be 6-8% of sales for next fiscal year. The pharma company has guided for a mid-to-high single digit year-on-year revenue growth in FY26. The company expanded market share in the domestic formulations business to 8.3% in the March quarter from 8%a year ago. In the September 2025 quarter, Sun Pharma is expected to launch Leqselvi (deuruxolitinib),which is used to treat severe alopecia areata, a type of hair loss. Elara Capital estimates the drug to be more than $200million product in three-four years. In FY26, the company also plans to launch Unloxcyt (cosibelimab), a drug developed by the US based Checkpoint Therapeutics, which it acquired in March 2025 for $355 million. The company is seeking partners to further develop and commercialize MM-II (Large Liposomes of DPPC and DMPC) for select geographies. Phase 3 clinical trials are underway for this drug. 'It has been implementing efforts to not only expand offerings but also enhance marketing franchise in regulated markets for differentiated products,' Motilal Oswal Financial Services said in a report. The brokerage has reduced its earnings estimates by 3% and 1% for FY26 and FY27, considering the additional expense on specialty products marketing . It expects earnings to grow by 17% annually FY25-27. It has maintained 'BUY' with a target price of Rs2,000. On Friday, the stock was last traded at Rs1,678.3 on the BSE.
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Business Standard
23-05-2025
- Business
- Business Standard
Life Insurance shares in focus; HDFC Life, Max Financial hit record highs
Share price movement of life insurance companies today Shares of listed life insurance companies were in focus, gaining up to 4 per cent on the BSE in Friday's intra-day trade. Max Financial Services (up 4 per cent at ₹1,467.50) and HDFC Life Insurance Company (up 2 per cent at ₹770.95) hit their respective all-time highs. SBI Life Insurance Company, ICICI Prudential Life Insurance Company (ICICI Pru) and Life Insurance Corporation of India (LIC) were trading higher in the range of 2 per cent to 3 per cent. Axis Max Life Insurance, formerly known as Max Life Insurance Company., is a Joint Venture between Max Financial Services and Axis Bank. Axis Max Life Insurance offers comprehensive protection and long-term savings life insurance solutions through its multi-channel distribution, including agency and third-party distribution partners. Sector Outlook Insurance penetration is still low in India as compared to international benchmarks. Factors such as a large protection gap and expanding per capita income are key long-term growth drivers for the sector. India has a high protection gap; and credit protection products are still at an early stage and have the potential to grow multi-fold as penetration of retail loans improves in the country. Hence, Mirae Asset Sharekhan believes the insurance sector has a huge growth potential in India. Against this backdrop, the brokerage firm believes that strong players with the right mix of products, services, and distribution are likely to gain disproportionately from the opportunity. However, regulatory changes/ competition, may impact growth and profitability. Elara Capital view on HDFC Life Insurance HDFC Life Insurance reported an APE (annualized premium equivalent) growth of 10 per cent year-on-year (YoY) in March 2025 quarter (Q4FY25), driven by: a) sharp growth in participating products on the back of new product launches, b) a pick-up in retail annuity segment, c) continued growth in retail protection segment and d) unit linked products (ULIP). Consequently, Value of New Business (VNB) margin improved QoQ and YoY by 30bps and 50bps, respectively, resulting in a VNB growth of 12 per cent YoY in Q4FY25. ALSO READ | Analysts at Elara Capital believe APE and VNB growth for HDFC Life will continue to be higher than industry as it continues to enhance its strong franchise with innovative products and investments in technology transformation and deeper distribution. The brokerage firm raised its target multiple to 2.5x P/EV FY27E from 2.1x P/EV, on the back of 50bps reduction in cost of capital implying a raised target price of ₹870 (from ₹720) – Upgrade to Buy. Emkay Global Financial Services on SBI Life Over recent quarters, SBI Life has invested heavily in the agency channel, leading to higher agent activation and increased productivity. Going forward, the management would continue to invest in the agency led by investments in both, agent and branch additions. Against this backdrop, the management remains confident of delivering ~20- 25 per cent Retail APE growth in the agency channel, whereas the banca channel should track single digit Retail APE growth resulting in overall ~13-14 per cent retail APE growth for the company in FY26. ALSO READ | The management expects a stable margin outlook, given 1) lower contribution from ULIP to be offset by growth in Par, both tracking similar margins, 2) increase in share of non-par and protection products, 3) investments in the agency channel and opening of new branches leading to higher fixed costs. The brokerage firm reiterated its BUY rating and revised up its Mar-26E target price to ₹1,950 (from ₹1,850 earlier), implying 2.0x FY27E P/EV.
