Nutrient-based indices are commonly used to assess the health potential of individual foods for nutrition policy actions. This study aimed to evaluate the nutrient profile-informed Australian Health Star Rating (HSR), against NOVA and an index informed by the Australian Dietary Guidelines (ADGs), to determine the extent of alignment. All products displaying an HSR label in the Australian marketplace between June 2014 and June 2019 were extracted from the Mintel Global New Product Database, and classified into one of four NOVA categories, and either as an ADG five food group (FFG) food or discretionary food. Of 4451 products analysed, 76.5% were ultra-processed (UP) and 43% were discretionary. The median HSR of non-UP foods (4) was significantly higher than UP foods (3.5) (p < 0.01), and the median HSR of FFG foods (4) was significantly higher than discretionary foods (2.5) (p < 0.01). However, 73% of UP foods, and 52.8% of discretionary foods displayed an HSR ≥ 2.5. Results indicate the currently implemented HSR system is inadvertently providing a ‘health halo’ for almost ¾ of UP foods and ½ of discretionary foods displaying an HSR. Future research should investigate whether the HSR scheme can be reformed to avoid misalignment with food-and diet-based indices.