The analyst pointed to a potential breakout as the stock trades within a key resistance zone, backed by bullish RSI divergence and a possible inverse head and shoulders pattern.
Star Health and Allied Insurance rose 3.1% Wednesday after delivering a strong recovery in the first quarter of FY26, with net profit rising to ₹26.25 crore from just ₹0.51 crore a year ago.
The company’s Net Written Premium (NWP) for the quarter stood at ₹377 crore.
Despite a regulatory accounting shift that lowered reported gross premiums by ₹3,300 crore, the company’s bottom line remained resilient, reflecting efficient underwriting and strong actuarial practices.
The solvency ratio was reported at a healthy 2.22, well above the regulatory minimum of 1.5. The combined ratio improved to 99.19%, nearing breakeven, and earnings per share (EPS) rose to ₹4.47 from flat levels in the same period last year.
Operating profit was further supported by robust investment income totaling ₹176.56 crore.
SEBI-registered analyst Rajneesh Sharma noted that the company’s improving fundamentals are aligning with visible technical strength.
On the charts, Star Health has formed a V-shaped recovery from the ₹340–₹360 range and is now trading around ₹426, positioned within a tight triangle of multiple resistance lines.
Sharma identified the ₹420–₹480 range as a key “action zone,” with immediate resistance at ₹450–₹460 and a critical breakout level at ₹480.
He added that volume patterns are showing a typical compression setup, where declining volumes often precede a breakout.
Relative Strength Index (RSI) momentum also supports the bullish thesis, with a bullish divergence confirmed — RSI at 49.02 against a signal line at 49.54 — and a breakout from the RSI downtrend now in place.
From a pattern perspective, Sharma highlighted a potential inverse head and shoulders formation, suggesting the possibility of a sustained bullish reversal if price action breaks above key levels.
Support is seen at ₹340–₹360, with minor psychological support around ₹400. A confirmed breakout could mark a shift from long-term consolidation to upward momentum.
On the corporate side, CEO Anand Roy said the company is scaling its retail health segment in tier 2 and 3 cities, while also expanding its group and corporate offerings.
It continues to invest in automating compliance and claims processing and is actively working to strengthen cybersecurity following a past breach.
The Insurance Regulatory and Development Authority of India (IRDAI) imposed a ₹3.39 crore penalty related to the incident, which the company has fully provisioned for and is evaluating an appeal.
On the business side, retail health remains the dominant revenue contributor.
The group health segment is seeing healthy volume growth despite some margin pressure, while motor and fire continue to play a minor role.
Investment income held steady across portfolios despite macroeconomic volatility, and actuarial reserves, including IBNR, IBNER, and PDR, were certified without any material deviations.
According to Sharma, Star Health is approaching a critical inflection point.
With improving fundamentals and a strengthening technical setup, the coming weeks could determine whether the stock breaks out of its consolidation phase and begins a new upward trend.
On Stocktwits, retail sentiment was ‘bearish’ amid ‘normal’ message volume.
Star Health’s stock has declined 8.6% so far in 2025.
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