Religare Enterprises: Buying a Hidden Health Insurer at a Discount

Buying the best asset at a discount the structure created, and let a process you can see surface the rest

The market’s most crowded trades are paid for in advance. A clean compounder with a clear story is often priced for years of growth before that growth arrives, and fashionable themes frequently embed a decade of optimism long before the first decade has even begun. You can be right about the business and still earn mediocre returns because the good news was already reflected in the price when you bought.

We look in the opposite place: at businesses the market would rather not own yet. Not bad businesses, but fundamentally sound ones wrapped in something that makes them difficult to hold today: a tangled corporate structure, an unfinished corporate action, a troubled past that still frightens institutional capital, or reported numbers that obscure the underlying economics.

Many of the best special situations emerge from this dynamic. A company that owns several unrelated businesses is often worth less than those businesses would be worth separately. What makes these situations attractive is that the discount has a natural enemy. Demergers, spin-offs and holding-company simplifications exist precisely to separate the pieces and allow them to be valued on their own merits.

Religare Enterprises is, in our view, a textbook example of this dynamic. We will spend the rest of this note explaining why.

Religare Enterprises: what it is, what it was, and why we are looking now

Religare Enterprises Limited is a listed holding company, formally a Core Investment Company registered with the RBI, that sits on top of four operating businesses:

At the time of our buying and recommendation, Religare was trading at a mcap of Rs 8,700 crore fully diluted once the outstanding preferential warrants convert (the share count rises from about 33 crore to roughly 39.4 crore).

For most of the last decade, Religare was un-ownable, and deservedly so. Under its previous promoters it became an example for what can go wrong in Indian financial services: large-scale fund diversion by the erstwhile promoters, a Rs 750 crore fixed deposit at Lakshmi Vilas Bank effectively appropriated against group borrowings, a corrective-action plan imposed by the RBI on Religare Finvest, fraud tags placed on the lending entity by its own bankers, and a takeover battle that ran for eighteen months.

That chapter is now structurally closed, and the agent of the change is the reason we are interested. In February 2025, after an eighteen-month contest, the Burman family, the promoters of Dabur, completed their open offer and were designated promoters of Religare. This was not a passive financial stake. The Burmans displaced an entrenched incumbent management (more on that, and on what it says about their treatment of minorities, later), took board control, and began the work of cleaning up.

In July 2025 the RBI lifted the corrective-action plan on Religare Finvest, and the lenders subsequently removed their fraud classifications. In September 2025 the company raised Rs 1,500 crore through a preferential issue of warrants, subscribed equally by the Burmans and a marquee investor group. And in February 2026 the board approved a demerger that begins to separate the hidden jewel from the holding company.

We are interested for one reason above all others. Underneath this convoluted structure sits Care Health Insurance: India’s second-largest standalone health insurer, profitable every year since FY19, growing well ahead of the industry, and almost entirely obscured by the holding-company layers above it. The thesis, in a sentence, is that a sequence of corporate actions already in motion, the demerger of the financial-services businesses, the promoters’ steady accumulation of stock, and an emerging regulatory path to reverse-merge Care into the listed entity, will over the next two to three years convert Religare from a complex holding company into what is effectively a cleanly-listed pure-play health insurer, and should prompt the market to pay for Care at something close to what its listed peers command.

The Current Demerger Scheme

On 14 Feb 2026, the boards of Religare Enterprises and Religare Finvest approved a scheme of arrangement that demerges the entire financial-services business, the lending NBFC, the housing-finance subsidiary, the broking and distribution arm and the e-governance operation, out of Religare Enterprises and into Religare Finvest, which will then list separately. Religare shareholders will receive one share of Religare Finvest for every one share of Religare they hold; Religare Finvest will open as a near-mirror image of the parent’s shareholding, and both companies will remain listed on the BSE and NSE.

After the scheme, the listed Religare Enterprises will hold one asset: its 63.2% stake in Care Health Insurance. The lending, housing finance and broking businesses move into a separately-listed vehicle that investors can value on their own terms. Management has been explicit about the intent: the objective is to “separate the FS business from the insurance business and to provide a clean structure so that the shareholders can understand,” after which Religare “will become a pure play health insurance holding company.”

The scheme is board-approved but still requires filings with, and approvals from, the stock exchanges, SEBI, the RBI and ultimately the NCLT, alongside shareholder and creditor consents. Management has guided that the demerged Religare Finvest is expected to list around Q3 FY27 to Q1 FY28.

By having Religare down to nothing but its Care stake, it turns Religare into precisely the kind of clean, non-operating holding company that can, under an emerging regulatory framework, be reverse-merged with the insurer beneath it. That is where the real value lives, and we will come to the regulatory path shortly. First, the asset itself.

Care Health Insurance: the business we actually want to own

Care Health Insurance is India’s second-largest standalone health insurer (SAHI), behind only Star Health. Standalone health insurers are the specialists of Indian health cover, distinct from the multi-line general insurers (ICICI Lombard, Bajaj Allianz and the like) for whom health is one segment among motor, fire and crop. Within the SAHI universe Care holds roughly a 22% share; in retail health specifically, the most valuable and stickiest part of the market, it commands around 11 to 12% of the entire industry, placing it second only to Star and ahead of Niva Bupa.

A word on the reported profit, because it is the single most important thing to understand about Care today and the reason the market under-appreciates it. From October 2024, IRDAI requires insurers to account for multi-year policies on a “1/n” basis, spreading the premium over the life of the policy rather than booking it upfront. FY26 is the first full year on this basis, while FY25 carried only about six months of it, so the two years are not comparable, and the change mechanically depresses both reported premium and reported profit during the transition.

On the statutory 1/n basis, Care’s FY26 profit before tax looks like a modest Rs 18 crore; on the economic (“n”) basis that reflects how the business actually performed, it is Rs 539 crore, up 38%. The 1/n drag is an accounting deferral, not an economic loss; the premium is collected and the cash is in the bank. But it makes the headline number look weak. As the combined ratio grinds toward 100% over the next two years on operating leverage, management has effectively confirmed that Care’s annual profit can reach Rs 700 to 800 crore.

How does Care stack up against the listed comparables? We have benchmarked it against the two listed standalone health insurers, Star Health and Niva Bupa, and against the company-level numbers of ICICI Lombard, using FY26 disclosures.

A few honest observations. Care is growing materially faster than the market leader Star (which is deliberately slowing retail growth to protect its loss ratio) and well ahead of the multi-line incumbents, while compounding at a rate broadly comparable to the smaller, faster-growing Niva Bupa, but doing it on a base roughly 1.2 times larger than Niva’s. Its combined ratio sits in the same range as Niva’s and a little behind Star’s best-in-class number, with a clear path to improvement. The one genuine relative weakness is solvency: at 1.68x, Care runs the thinnest capital buffer of the peer set, which is exactly why part of the recent raise (Rs 600 crore in total, Rs 256 crore already infused via a rights issue) is being routed into the insurer to fund growth and rebuild the cushion. None of this changes the conclusion: this is a structurally sound, scaled, profitable franchise operating in the best segment of Indian general insurance.

Indian health insurance remains structurally under-penetrated, and the standalone health insurers are taking share within it. The September 2025 removal of GST on individual health premiums delivered a step-change in affordability, retail health premiums across the industry grew around 30% in the second half of FY26, and Care, with two-thirds of its book in retail, is a direct beneficiary. Management guides to sustainable growth of 18 to 24% over the next three to four years. We think that is achievable, and it is the foundation of the valuation below.

Burmans (Dabur family - current promoters) are buying

The most informative signal in any special situation is what the people who know the most are doing with their own money. Here, the Burmans are buying, steadily and through more than one channel.

Through open-market purchases, the family raised its Religare stake by around 4% in the March 2026 quarter alone, to about 30.3%. On top of that, the Rs 1,500 crore preferential warrant issue, Rs 750 crore subscribed by the Burmans and Rs 750 crore by a marquee investor group, priced at Rs 235, will on full conversion take the promoter holding to roughly 34%. Promoters do not put incremental capital to work at this scale, across both open-market buying and a priced preferential issue, in a company they intend to leave as a discounted holding company. They do it when they intend to collapse the discount and own the asset underneath.

To see why the stake-building is not merely a vote of confidence but a structural necessity, you have to understand the IRDAI ownership rules. Indian insurance regulation requires an insurer’s promoters to hold at least 50% of its equity; for a listed insurer with a satisfactory five-year solvency record, that floor steps down to 26%. Either way, for Care to be separately listed or merged into the listed entity in a clean structure, the promoter group’s effective, or “see-through,” ownership of Care has to reach roughly 25%.

Today it does not. The Burmans own about 30.3% of Religare, and Religare owns 63.2% of Care, so the family’s see-through stake in Care is only about 19% (management quotes 18 to 19%). Even after the warrants convert and the Religare holding rises to about 34%, the see-through reaches only around ~22% (34% multiplied by 63.2%). There is a gap of a few percentage points to close, and there are two levers, both pointing the same way:

1. The promoters keep buying Religare, lifting their stake further; and / or

2. Religare buys out one or more of Care’s minority shareholders, raising Religare’s direct stake in Care above 63.2%, which lifts the see-through faster than buying Religare stock does.

The second lever is the more powerful, and it connects directly to the rumoured exit of Care’s largest minority holder, which we discuss in the next section. To illustrate the arithmetic: if Religare were to acquire Kedaara Capital’s roughly 18% of Care, Religare’s direct stake would rise toward 81%, and at a 34% promoter holding the see-through would be about 27.5%, comfortably through the threshold. The path is not hypothetical; it is a question of sequencing and price.

And the regulatory door to the end-state has just opened. The obvious template for what Religare is doing is Max Financial, where the listed holding company was to be merged with the life insurer it owned, a structure IRDAI blocked under the old rules, which permitted insurance mergers only between two insurers of the same class. On 16 June 2026, IRDAI published proposed amendments that would explicitly permit an insurer to merge with a non-insurance company, provided that company is the non-operating holding company of the insurer and holds more than 50% of its equity, has no business operations of its own, and pays consideration only in its own equity to the holding company’s shareholders. Read that against Religare post-demerger: a non-operating holding company whose only asset is a 63.2% stake in Care, controlled by a promoter already cleared as fit and proper. The proposal could hardly describe Religare’s intended structure more precisely if it had been drafted for it. Comments are open until 6 July 2026. This is exactly the kind of structural catalyst, a regulatory process with a defined timeline rather than a change of sentiment, that defines a good special situation.

What it is worth: the sum-of-the-parts (SOTP)

We value Religare the way the eventual structure will force the market to value it, as the sum of a health insurer and a financial-services platform, rather than as the holding-company blob it appears to be today. Our framework uses FY27 estimates and a fully-diluted count of roughly 39.4 crore shares. We apply our multiples to Care’s FY27 gross written premium of about Rs 14,400 crore and to the financial-services entity’s expected book value of about Rs 2,000 crore.

The multiples are deliberately conservative. We give Care just 1.5 times forward gross written premium in the base case, against listed SAHI peers that have traded around and above this level, and the financial-services platform only 1.0 times book. On those assumptions Religare is worth about Rs 15,650 crore, or Rs 396 per share.

Two points compound the case. First, what this framework leaves out: any value for growth and optionality inside each business. We have not credited Care’s compounding, at a sustainable low-twenties growth rate GWP can approach Rs 20,000 crore by FY28, which on the same multiples would value the insurer alone at Rs 30,000 to 40,000 crore, nor the second compounding engine in financial services, nor the potential recovery of the Rs 750 crore Lakshmi Vilas Bank deposit (fully provided for, currently sub-judice in the Delhi High Court, and therefore pure upside if recovered). We have left those for the future to decide. Second, the anchor: at the entry price the market is paying roughly Rs 8,700 crore fully diluted for a 63.2% stake in Care plus everything else, while Care alone, at the base-case multiple, is worth about Rs 13,650 crore to Religare. You are buying the best asset for less than it is worth and getting the rest for free.

What if the reverse merger never happens?

We underwrite the downside before the upside, and here the downside is unusually well protected. The bad outcome is not that the businesses deteriorate, they are growing and profitable, but that the structure stays messy: the reverse merger does not happen, Care is never listed cleanly, and the holding-company discount persists.

Even in that world the arithmetic is benign. Care’s base-case business value is around Rs 21,600 crore; Religare’s 63.2% of that is about Rs 13,650 crore. Apply a punitive 40% holding-company discount, and the stake is still worth roughly Rs 8,000 crore. Add about Rs 2,000 crore for the financial-services platform and you are at around Rs 10,000 crore against a fully-diluted market value of about Rs 8,700 crore. In other words, even if nothing structural is ever fixed, the current price is roughly fair-to-cheap on a discounted holdco basis. That is the asymmetry we look for: limited downside if the structure persists, substantial upside if it resolves.

There is also a specific, identifiable mechanism that makes resolution more likely than the market assumes, and it runs through Care’s minority shareholders. The largest of them is Kedaara Capital, the private-equity firm, which invested around Rs 567 crore in 2020 for what is today a stake of roughly 18%. That position is now approaching six years old. This is important to note because of how PE funds that manage outside capital are wired: they run on finite fund lives and are accountable to their own limited partners for returning cash. A six-year-old position in an unlisted company is, by the standards of a private-equity fund, mature and due for monetisation.

Now put yourself in that holder’s shoes. The stake is large, valuable and completely illiquid. Care is unlisted, so there is no market to sell into. There is no clean path to an IPO until the promoter-ownership rules are satisfied, which, as we have seen, requires the promoter to consolidate rather than the minority to hold on. And the natural, in fact the only obvious, buyer is Religare itself, which needs precisely this stake to cross the IRDAI threshold. The incentives line up almost perfectly: a long-duration financial owner that needs liquidity, and a strategic owner that needs the stake. The same logic applies, in smaller size, to Care’s other non-core holders, public-sector banks and the founder-CEO’s residual stake of about 5.5%, for whom the position is a legacy holding rather than a strategic one. We do not need to predict the timing. We only need to recognise that, in the current structure, Care is a difficult asset for a minority to exit by any route other than selling to Religare, and that every such sale mechanically advances the promoter toward the 25% it needs.

Can Minority Shareholders be screwed?

A special situation is, in the end, a bet on the people executing the corporate action. The discount closes only if those in control choose to share the value with minority holders rather than keep it for themselves. On that question, the Burmans’ record is about as reassuring as Indian promoter records get.

The family has controlled Dabur for well over a century, the company traces to 1884, and built it into one of India’s most respected listed corporates and a long-running creator of minority wealth. More tellingly for our purposes, the Burmans were among the very first Indian business families to separate ownership from management: in 1998 they stepped back from running the company day-to-day, handed operations to professional managers, and instituted a formal family council to govern the interface between the family and the business. This is not a family that confuses control with extraction. Their model has been to own well, govern at arm’s length, and let professional management compound value for all shareholders, exactly the posture you want from the controlling owner of a holding company you are buying for its underlying asset.

The past actions make Burmans screwing minority shareholders a less probable outcome. One of our recent conversations with a good Bangalore based full time investor made us to come to this conclusion when the said investor was talking about Tatas and a special situation in Tata Steel partly paid up share.

Team at the Lending and Broking Business

While the entire post has been about the insurance business, we think it is important to spend sometime on how the lending business is evolving at Religare.

Burmans are following the same rule set which they have followed in their earlier ventures. The same seriousness is visible in how they are rebuilding the lending and broking businesses. Below are some of the recent hires for these businesses:

• Vijay Goel, who spent fourteen-plus years running multiple businesses at Motilal Oswal, has joined as Managing Director of Religare Broking.

• Karthik Srinivasan, from HDB Financial Services, has come in as CEO of Religare Finvest to rebuild the MSME lending business.

• Babu Rao, from Bajaj Finance, is Group General Counsel and Chief Compliance Officer.

• Indranil Choudhury, previously CHRO of UTI Mutual Fund, is Group CHRO.

• Pankaj Rathi, formerly CFO of Grihum Housing Finance, has joined the housing-finance subsidiary.

Management has been explicit that the strategy is to “hire the right talent, empower them, incentivise them,” with ESOP structures to match.

Ending Words

Religare is the kind of opportunity that does not come along often and is uncomfortable to own when it does, which is exactly why it is mispriced. The market sees a complicated holding company with a troubled past, a confusing structure, and a headline profit number depressed by an accounting transition. We see a clean, simple thing underneath: India’s second-largest standalone health insurer, profitable every year since FY19, growing in the low-twenties in the best segment of Indian insurance, owned by a century-old promoter family with an unusually clean record toward minority shareholders and a clear, already-initiated plan to surface its value.

The corporate actions are not a hope; they are in motion. The demerger is board-approved. The promoters are buying in the open market and through a priced preferential issue. The regulator has just proposed the precise rule the end-state requires. And the one stakeholder who could hold up the path, a long-held private-equity minority, has every incentive to sell to the only natural buyer. If it all resolves, we own a pure-play listed health insurer at a fraction of what its peers fetch. If it does not, the value of Care alone, even at a steep holding-company discount, roughly covers the price we paid.

At Nine One Capital, we spend a significant amount of time building the right analytical foundation before forming a view on any company. If you would like to understand our research process in more depth or explore how our advisory services can support your investment journey, you can reach us at gaurav.a@nineonecapital.in or fill in the form here (link).

Important Note and Disclaimer: Nine One Capital is a SEBI Registered Investment Adviser (Registration No. INA000018814). This article is not a buy/sell recommendation. We are simply highlighting a potentially mispriced opportunity based on publicly available data. We could be wrong, and investors must do their own due diligence before taking any position. Please note that this note is shared only for the education purpose and in no way, it constitutes any buying or selling recommendation. We and our clients hold a position in Religare Enterprises Ltd and may transact in it. Past performance is not indicative of future returns.