** Citi initiates coverage on Australian insurance broker Steadfast Group SDF.AX with a "buy" rating and a PT of A$6.50

** SDF shares rise 1.9% to A$5.47

** Brokerage attracted to quality of business as it offers more than 90% retention on premiums, carries no insurance risk, is cash flow generative and has strong track record of beating guidance

** Says SDF is a resilient business at a time when there is evidence of private equity interest in Australia's broking sector

** Citi sees solid pipeline of M&A and core margin expansion, which will complement profit growth

** Eight of 10 analysts rate the stock "buy", and two "hold", their median PT is A$6.77

** As of last close, stock was down 7.4% YTD

(Reporting by Himanshi Akhand in Bengaluru)

((Himanshi.Akhand@thomsonreuters.com))