Why Did Star Health's Profit Plummet by 99.76% in Q4?
Click to start listening
Synopsis
Star Health and Allied Insurance Company has reported a shocking drop in profits, raising concerns about its financial stability. The company's net profit plummeted by an astounding 99.76% this quarter, highlighting the challenges it faces amidst rising operational costs and claim settlements. How will this impact the company's future moving forward?
Key Takeaways
- The company's net profit plunged by 99.76% in Q4 FY25.
- Total expenses reached Rs 4,073.49 crore, up 5.8% from Q3.
- Gross premium written increased to Rs 5,138.01 crore, a 35.3% rise from the previous quarter.
- The decline follows a challenging Q3 with a 25.7% YoY drop in profit.
- Star Health's shares were slightly up by 0.28% on the NSE.
Mumbai, April 29 (NationPress) - Star Health and Allied Insurance Company revealed a shocking 99.76% drop in its net profit, reporting merely Rs 0.51 crore for the fourth quarter of the financial year 2024-25 (Q4 FY25), a stark contrast to Rs 215.14 crore recorded in Q3.
The year-on-year (YoY) assessment is equally disheartening, with the company's net profit plunging by 99.64% from Rs 142.32 crore in the same quarter of the previous year (Q4 FY24).
This dramatic decline has severely impacted the company’s financial health on both a quarter-on-quarter (QoQ) and YoY basis.
Total expenses surged to Rs 4,073.49 crore in the March quarter, marking an increase of 5.8% from Rs 3,848.66 crore in Q3 and 16.8% from Rs 3,487.17 crore in the corresponding period last year.
The significant escalation in expenses, particularly due to higher claim settlements and operational costs, seems to have overshadowed the advantages gained from increased premium income.
Despite a remarkable rise in gross premium written — the total income from all sold policies — which reached Rs 5,138.01 crore in Q4, up 35.3% from Rs 3,796.12 crore in the preceding quarter, profit plummeted due to rising expenses, as per the company's stock exchange disclosure.
This underwhelming quarter follows a difficult Q3, where Star Health had already disclosed a 25.7% YoY decline in net profit to Rs 215.1 crore, down from Rs 289.6 crore a year prior.
However, the company did report a 15.4% YoY increase in net earned premium to Rs 3,799.7 crore in Q3.
It also faced a 45.8% drop in EBIDTA to Rs 152.5 crore in Q3.
On Tuesday, Star Health’s shares closed at Rs 399, rising by Rs 1.10 or 0.28% on the National Stock Exchange (NSE).
Point of View
I view Star Health's recent profit decline as a crucial reminder of the volatility present in the insurance sector. Despite an increase in premiums, the rising expenses due to claims and operational costs highlight the challenges that insurers face in maintaining profitability. It is essential for industry players to adapt and strategize effectively to ensure sustainability.
NationPress
22/07/2025
Frequently Asked Questions
What caused Star Health's profit decline?
The profit decline was primarily caused by a significant increase in total expenses, particularly from rising claim settlements and operational costs, which overshadowed the benefits of higher premium income.
How does this quarter compare to previous quarters?
In Q4 FY25, Star Health reported a 99.76% decline in net profit compared to Rs 215.14 crore in Q3 FY25 and Rs 142.32 crore in Q4 FY24, indicating a worrying trend.
What are the financial highlights of Star Health's Q4 performance?
Star Health reported total expenses of Rs 4,073.49 crore and a gross premium written of Rs 5,138.01 crore in Q4, despite the significant profit drop.
