The brokerage firm Nuvama has retained its positive stance in the life insurance sector despite a mix of tailwinds and headwinds. In its report, the firm outlines its outlook for FY26, highlighting top picks across categories from life insurers to intermediaries.
Let’s take a look at what the brokerage has to say about the sector – and the stocks it’s most bullish on-
Nuvama on Life Insurance sector: Life insurers – Margins set to stabilise
According to Nuvama, life insurers are seeing a moderation in linked business growth due to a high base and subdued performance in credit life sales. Nuvama forecasts a modest 5.9% YoY growth in aggregate APE (Annualised Premium Equivalent) for Q1FY26. This is largely due to a high base in linked products and sluggish sales in credit life insurance, the brokerage said.
The brokerage sees Value of New Business (VNB) margins holding steady at 22.3%, slightly up by 28 basis points year-on-year, which should result in a 7.2% growth in VNB.
“Investors shall keenly watch out for growth and product mix guidance for FY26E and beyond along with margin outlook,” the brokerage added in its report.
The brokerage expects linked product sales to take a backseat due to current market volatility, but believes that traditional and protection segments will continue to see healthy demand.
Nuvama on Life Insurance sector: General Insurers – Slower top line, margins in focus
In the general insurance space, the industry clocked 9.1% YoY growth in Q1FY26, while standalone health insurers (SAHIs) grew at 10.5%.
Motor GDPI (Gross Direct Premium Income) was up 11.1% in April and 8.2% in May, but the brokerage flagged concerns over elevated Combined Ratios (CoRs).
Nuvama noted that investors should monitor competitive intensity within the industry, commission payouts amid Expenses of Management (EoM) constraints, and rising loss ratios in key verticals.
Despite these concerns, the brokerage is optimistic about ICICI Lombard General Insurance and Star Health, raising their target prices. “We are raising the target price of ICICIGI to Rs 2,300 (earlier Rs 2,100), valuing it at FY27E P/E of 36x,” the note said.
“We are also raising the TP of STARHEAL to Rs 500 (earlier Rs 450), valuing the stock at FY27E P/E of 25x,” added the brokerage
Nuvama on Life Insurance sector: Insurance intermediaries – Growth engines intact
In the insurance intermediary space, PB Fintech continues to deliver strong growth. According to Nuvama, the new health and term insurance verticals are expected to drive more than 30% YoY growth in total platform premiums.
“We reckon operating leverage shall drive margins and result in adjusted EBITDA growth of 79.9% YoY,” the brokerage said.
On the other hand, Medi Assist may face a softer performance from its international segment, though core domestic operations remain resilient. Margins are likely to hold steady, even with some one-off costs.
Nuvama’s top picks in insurance
Life Insurance-
- HDFC Life is one of Nuvama’s top picks in the life insurance space. The brokerage has assigned a target price of Rs 920.
- Max Financial Services also features as a preferred pick. Nuvama has set a target price of Rs 1,810.
General Insurance-
- ICICI Lombard is recommended with a revised target price of Rs 2,300. The brokerage values the stock at 36x FY27E P/E.
- Star Health is another top choice, with a target price of Rs 500. Nuvama values it at 25x FY27E P/E.
Insurance Intermediaries-
- PB Fintech is expected to post over 30% year-on-year growth in platform premiums.
- Medi Assist is also on the radar, with Nuvama noting steady core business growth.