Tag: Star Health IPO

Rakesh Jhunjhunwala-backed Star Health’s stock recovers after weak debut

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ace investor Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company’s shares recovered lost ground after a weak debut on Dalal Street on Friday. Star Health shares rose to as high as Rs 940 apiece each on stock exchanges BSE and NSE, a premium of 4.4 percent over the issue price, after listing at a discount of around six percent.

The Star Health stock gave up most of those gains, but managed to finish the day in the green. Star Health shares closed at Rs 906.85 apiece on BSE, a premium of 0.8 over the issue price. On NSE, the stock settled at Rs 901, a premium of 0.1 percent.

ALSO READ: How D-Street is reading Star health GMP trend

Star Health began its journey in the secondary market earlier in the day, at Rs 848.8 apiece on BSE and Rs 845 on NSE.

The weak listing of Star Health and Allied Insurance – which is owned by a consortium of investors such as the Big Bull, Jhunjhunwala, and Westbridge Capital – reflects the trend seen in the grey market in the past few days.

“We have to understand that at what level the market will be comfortable at… Expensive valuations and the dent in profitability due to COVID were key concerns for investors,” said Parth Nyati, Founder of Tradingo.

He suggests investors looking to buy Star Health shares afresh to wait, and those who eyed a listing gain in the IPO to exit. “However, the long-term outlook for the company is bullish thanks to the strong brand name and low penetration of health insurance in India… Long-term investors should be patient and hold the stock,” Nyati added.

Ravi Singhal, Vice Chairman at GCL Securities, expects the Star Health stock to decline going forward.

“One should take a fresh position around Rs 725-750 for six months for a target of Rs 1,000-1,100 with a stop loss at Rs 640,” he said.

ALSO READ: IPO investing – How to read key numbers, spot red flags in a draft prospectus

Star Health’s IPO saw an overall subscription of 79 percent, receiving bids for 3.6 crore shares as against the 4.5 crore shares on offer. The public offer was available for bidding from November 30 to December 2,

The portion reserved for retail investors was subscribed 1.1 times and that for qualified institutional buyers one time. The non-institutional investors’ category saw a subscription of 19 percent.

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Haven’t sold any shares in Star Health IPO, have full confidence in management: Rakesh Jhunjhunwala

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Star Health and Allied Insurance Company made a tepid debut at the exchanges on Friday. Backed by billionaire investor Rakesh Jhunjhunwala, the stock listed at a 6 percent discount over its issue price of Rs 900. On the NSE platform, the scrip opened at Rs 845; while on BSE, it started trading at Rs 848.80.

The ace investor told CNBCTV-18 that even though near-term factors do affect the perception of valuation, he has full confidence in the management of Star Health and thus have not sold any shares in the IPO of Star Health insurance.

“Health insurance is a nascent industry in India and star health has a 31 percent market share in retail health insurance. I invested in Star Health 30 months ago and industry dominance is one of the reasons I never sold any shares in the IPO,” Jhunjhunwala told CNBCTV-18.

Also Read: Rakesh Jhunjhunwala-backed Star Health makes weak market debut, shares list at 6% discount to issue price

The country’s largest private health insurer cut the size of its IPO to Rs 6,400 crore from Rs 7,249 crore earlier after a subdued response to the IPO last week.

“It was not a very intensely bid process but it was an intensely complicated process because there was a dispute between the promoters who wanted to sell to us. And it took 18 months for us to complete the transaction. If I would have listened to the lawyers, I would have never completed it. The growth without profitability has no purpose. So the essential idea is to have profit. COVID is once in a lifetime situation, I don’t think it is going to occur again, in my opinion, it’s all dead except the noise,” he added.

Read More: Rakesh Jhunjhunwala-backed Metro Brands IPO opens today: Should you subscribe to the issue?

“There is a good succession plan in place in the company and there is hope it will do well in future and hence I have retained my stake in Star Health.”

However, Rakesh Jhunjhunwala said that he is not participating in any public issues. “I am not participating in any of the public issues, so it makes no difference to me and the merchant bankers are the ones who are advising the valuations.”

He also remains bullish on the equity market. “I think we’ll see a positive market next year also,” said Jhunjhunwala.

For the full interview, watch the accompanying video.

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Rakesh Jhunjhunwala-backed Star Health makes weak market debut, shares list at 6% discount to issue price

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ace investor Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company’s shares made a weak debut on Dalal Street on Friday. The Star Health stock debuted at Rs 848.8 on BSE, a discount of 5.7 percent to its issue price of Rs 900. On NSE, the Star Health Insurance stock began its secondary market journey at Rs 845, a discount of 6.1 percent.

ALSO READ: How D-Street is reading Star health GMP trend

The weak listing of Star Health and Allied Insurance – which is owned by a consortium of investors such as Jhunjhunwala and Westbridge Capital – reflects the trend seen in the grey market in the past few days.

Star Health traded at a discount of Rs 60-70 (negative GMP) in the grey market ahead of the listing. Grey market is an unofficial market for unlisted securities. 

ALSO READ: Grey market explained – what is it and does it predict listing gains?

Fresh investments in the Star Health stock can wait and those who applied for the IPO eyeing a listing gain can exit now, said Parth Nyati, Founder of Tradingo.

“We have to understand that at what level the market will be comfortable… Expensive valuations and dent in profitability due to COVID were key concerns for investors. However, the long-term outlook for the company is bullish thanks to the strong brand name and low penetration of health insurance in India,” he said.  

Long-term investors should be patient and hold the Star Health stock, Nyati added.

Star Health’s IPO, which was open for bidding from November 30 to December 2, saw an overall subscription of 79 percent, receiving bids for 3.6 crore shares as against the 4.5 crore shares on offer.

ALSO READ: IPO investing – How to read key numbers, spot red flags in a draft prospectus

The portion reserved for retail investors was subscribed 1.1 times and that for qualified institutional buyers one time. The non-institutional investors’ category saw a subscription of 19 percent.

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Star Health to list on BSE, NSE today: How D-Street is reading grey market trend

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company’s shares are set to make their debut on stock exchanges BSE and NSE on Friday. Ahead of their listing, the shares continued to trade at a discount in the grey market, an unofficial market for unlisted securities. Dealers said Star Health’s GMP continued around a negative Rs 60-70 (discount) in the grey market early on Friday.

Star Health erased the premium days ahead of the D-Day for the stock on Dalal Street. Around its IPO, which was open for subscription from November 30 to December 2, Star Health and Allied Insurance had commanded a grey market premium (GMP) of around Rs 15.

ALSO READ: Grey market explained – what is it and does it predict listing gains?

The Star Health IPO saw a subscription of 79 percent, receiving bids for 3.6 crore shares as against the 4.5 crore shares on offer. The portions reserved for retail investors and qualified institutional buyers were subscribed 1.1 times and one time respectively. The non-institutional investors’ category saw a subscription of 19 percent.

The listing of Star Health, which is owned by a consortium of investors such as Jhunjhunwala and Westbridge Capital, comes at a time when most IPOs have received a robust response from investors.

Most analysts expect Star Health shares to make a weak debut on D-Street.

Here’s what experts say ahead of the listing of Star Health shares on BSE and NSE:

Aayush Agrawal, Senior Research Analyst-Merchant Banking, Swastika Investmart:

“Star Health, the largest private sector health insurance company, got a  poor response due to expensive valuations, a dent in profitability due to COVID and fragile sentiments after the weak listing of Paytm. The listing is expected to be poor.”

“However, the long-term outlook for the industry and Star Health Insurance is promising. Therefore, we can expect buying interest at lower levels.”

Ravi Singh, Vice President and Head of Research, ShareIndia:

“Star Health may list at discount due to low subscription, however, taking in view the business parameters, the long-term outlook of health insurance sector is positive.”

“Investors may buy at lower levels and keep their holdings for better gains.”

Abhay Doshi, Co-Founder, Unlisted Arena: 

“Star Health’s IPO got a tepid response in the times where IPOs get highly oversubscribed and this may have a negative impact on its debut. The expensive pricing made investors wary… The debut most probably should be at a discount of possibly 8-10 percent to its issue price.”

ALSO READ: IPO investing – How to read key numbers, spot red flags in a draft prospectus

Manoj Dalmia, Founder and Director, Proficient Equities:

“The Star Health IPO received a poor response. It is overvalued at a price of Rs 870-900 per share despite the company suffering losses due to huge claims in pandemic.”

“The GMP is negative at Rs 70, which means we can expect a discounted listing of 8-10 percent.”

“Immediate selling is recommended considering its high valuation. One can expect price falls like that of Paytm. Buying at a fair valuation or lower price is suggested.”

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Star Health listing on BSE, NSE today: What grey market trend suggests

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ace investor Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company’s shares are likely to be listed on bourses on December 10. In the run-up to the listing day, the insurer erased the entire premium it commanded in the grey market. According to dealers, Star Health’s grey market premium (GMP) remained steady around a minus Rs 60-70 on Thursday, a day ahead of its market debut.

Star Health and Allied Insurance — owned by a consortium of investors such as the Big Bull, Jhunjhunwala, and Westbridge Capital — had commanded a GMP of around Rs 15 during its IPO.

ALSO READ: Grey market explained – what is it and does it predict listing gains?

The listing comes at a time when most IPOs have received a robust response from investors.

“Star Health’s IPO got a tepid response in the times where IPOs get highly oversubscribed and this may have a negative impact on its debut. The expensive pricing made investors wary,” said Abhay Doshi, Co-Founder of Unlisted Arena, a portal that tracks grey markets and deals in unlisted securities.

Aayush Agrawal, Senior Research Analyst-Merchant Banking at Swastika Investmart, also expects a poor listing for Star Health on Friday, citing expensive valuations, the dent in profitability due to COVID and fragile investor sentiment after the weak listing of Paytm.

“A poor listing is expected. However, the long-term outlook for the industry and Star Health Insurance is promising. Therefore, we can expect buying interest at lower levels,” he said. 

Doshi expects Star Health shares to list at a discount of 8-10 percent to the issue price.

The Star Health IPO, which was open for subscription from November 30 to December 2, was subscribed 79 percent, receiving bids for 3.6 crore shares as against the 4.5 crore shares on offer. The portions reserved for retail investors and qualified institutional buyers were subscribed 1.1 times and one time respectively. The non-institutional investors’ category saw a subscription of 19 percent.

ALSO READ: IPO investing – How to read key numbers, spot red flags in a draft prospectus

Since Paytm’s dismal listing, demand has remained strong for much smaller IPOs from companies with established business models.

Paytm parent One97 Communications’ shares have recovered some of the losses since a weak listing on the bourses. Paytm’s IPO — the biggest of all time in India, though fully subscribed, did not enjoy the kind of investor interest enjoyed by most debutants of recent times.

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Star Health Insurance IPO allotment likely today; How to check status

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Star Health IPO share allotment is likely to be finalised on Tuesday. The Rs 7,250 crore public issue, backed by ace investor Rakesh Jhunjhunwala received a tepid response from investors as it was subscribed 79 percent on the final day of the bidding process.

The price band for the IPO that was open for subscription between November 30 and December 2 was Rs 870-900.

Investors who had applied for the Star Health IPO can check the status of allotment of shares online, either through the registrar’s website or directly through the portal of BSE.

The status will only appear if the details are entered correctly. In the case of non-allotment, the blocked amount will be refunded to your bank account.

Here’s how you can check the allotment status:

Through the website of registrar – KFintech:

1) Visit the KFintech website

2) Select IPO name from the drop-down menu

3) Enter the application number or DP ID/Client ID or PAN

4) In the case of application number, select application type (ASBA or NON-ASBA) and ‘Enter Application Number’. In the case of DPID/Client ID, select Depository “NSDL or CDSL” and enter “DP ID/Client ID”.

On BSE:

1) Visit the BSE website

2) Select ‘Equity’ and then from the dropdown, select issue name

3) Enter your application number and PAN

4) Click on the “Search” button

The shares of Star Health Insurance are expected to list on December 10 on both major exchanges — National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

Also Read | Star Health IPO: How IPOs of other Rakesh Jhunjhunwala-backed cos have fared

The bidding received a tepid response from the investors and was subscribed 79 percent on the final day of bidding. The portion reserved for retail investors was subscribed 1.1 times, while that of non-institutional investors was subscribed 19 percent. Qualified institutional buyers (QIBs) subscribed to one-time reserved portions. They are required to bid for at least 90 percent of the portion reserved for them. The issue did not get traction even though the closing time was extended by a few hours for investors, except QIBs.

Star Health Insurance is a Chennai-based insurance company and claims to be the largest private health insurer in the country. It is backed by PE Firm West Bridge Capital and Big Bull. In FY21, its market share stood at 15.8 percent. Its gross written premium in FY21 and quarter ended September 2021 was Rs 9,348.95 crore and Rs 5,069.78 crore, respectively.

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Stock Market Highlights: Sensex ends 887 points higher as market rebounds; Tata Steel, Axis Bank up 4%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Stock Market Highlights: Indian equity benchmarks Sensex and Nifty50 made a big comeback on Tuesday following two days of decline. Gains across sectors, led by financial, IT, oil & gas and metal shares, pushed the headline indices higher. Broader markets also strengthened, with the Nifty Midcap 100 and Smallcap 100 indices rising more than one percent each.

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Star Health IPO subscribed 79% on Day 3, retail portion booked 1.1 times

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The initial public offering of Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company was subscribed 79 percent on December 2, the third and final day of bidding. The offer received bids for 3.6 crore equity shares against the IPO size of 4.5 crore equity shares.

The portion reserved for retail investors was subscribed 1.1 times, and that for non-institutional subscribers 19 percent. Qualified institutional buyers subscribed to one times of their reserved portion.

Star Health is a Chennai-based insurance company, backed by the Big Bull and PE firm West Bridge Capital. The IPO is estimated at Rs 7,249 crore, including an offer for sale worth over Rs 5,200 crore and a fresh issue of Rs 2,000 crore.

Also Read | Anand Rathi Wealth IPO subscribed 60% so far on Day 1

The price band for the offer was Rs 870-900 apiece. Brokerages recommended subscribing to the IPO, but with caution. Choice Broking said that at the upper end of the price band, Star Health is demanding a market cap to the net premium earned multiple of 10.3 times, which sits at a premium as compared to the peers. Moreover, the brokerage said, “the demanded valuation is at an elevated premium to recent capital issuance.”

Angel One, on the other hand, recommended subscribing to the issue as the company stands out among other standalone health insurers. It said the size and growth rate of the firm is better than peers. It also has a better operational performance, which was reflected in the pre-COVID numbers of the company, it said.

“The valuations commanded by Star Health at around 5.5 times FY21 MCAP/GWP are in-line with recent deals in the standalone health insurance space and appear fair considering its positioning,” Angel One said.

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Only one MF participates in Star Health anchor allotment

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Only one mutual fund participated in the share sale for institutional investors by Star Health and Allied Insurance before the initial public offering (IPO) on November 30, which mopped up Rs 3,217 crore from 62 funds. Most domestic mutual funds gave the anchor allotment a miss on account of differences over valuations.

Star Health’s Rs 7,250-crore IPO received Rs 14.88 crore from Edelweiss Mutual Fund’s scheme in the anchor allotment, The Economic Times reported.

Also read: Health insurance biz has gained huge momentum; expect to grow faster than the industry: Star Health

Some of the other anchor investors are BNP Paribas Arbitrage, Goldman Sachs (Singapore) Pte, Government of Singapore, Monetary Authority of Singapore, Morgan Stanley Asia (Singapore) Pte, Abu Dhabi Investment Authority and Societe Generale.

Domestic investors like HDFC Life Insurance, SBI Life Insurance, Edelweiss, Max Life Insurance, IIFL Special Opportunities Fund, and Bharti Axa Life Insurance also participated in the anchor allotment.

According to fund managers, mutual funds are uncomfortable with the high valuations of the IPO. The Rakesh Jhunjhunwala-backed insurer plans to mobilise Rs 7,250 crore from the public issue, which would be the third largest in 2021.

Also read: Star Health IPO: A SWOT (strengths, weaknesses, threats and opportunities) analysis

“When the business should be valued on the basis of its risk assessment capability, which is essentially profits, how can a company be valued on the premium collected?” a senior MF industry official told The Economic Times.

Fund managers said the insurer priced the IPO much above that of its peers ICICI Lombard or New India Assurance despite posting losses in FY21. Star Health suffered a loss of Rs 825.58 crore in the fiscal ended March 31, 2021 with a negative total income of Rs 907.77 crore. In FY20, Star Health had posted a profit of Rs 268 crore in FY20. The company said the losses in FY21 were on account of COVID-19 and extraordinary adjustments.

According to fund managers, mutual funds pointed out these concerns during the IPO roadshows conducted by the company.

On November 30, Star Health’s issue was subscribed 12 percent on the first day of bidding.

Also read: Star Health IPO: How IPOs of other Rakesh Jhunjhunwala-backed cos have fared

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow