Tag: Star Health Shares

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.”

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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 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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Expect to grow faster than industry, health insurance biz has gained huge momentum: Star Health

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

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Star Health’s initial public offer (IPO) to raise Rs 7,250 crore opened for subscription on Tuesday. CNBC-TV18 spoke with Star Health and Allied Insurance Managing Directors Dr Prakash Subbarayan and Anand Roy to discuss the company’s initial share sale and its business outlook.

Speaking on Star Health’s health insurance business, Roy said: “Star Health has always been a fast growing company and the health insurance business as such has gained huge momentum after the outbreak of the pandemic because of the creation of awareness. We expect to grow faster than the industry as we have always been doing in the past. In the current year also, we are able to show some very high growth numbers.”

Roy said the company was growing at almost 27-28 percent on a year-on-year basis as of the end of September, a rate it hopes to maintain in the coming years.

Read Here: Star Health IPO: A SWOT (strengths, weaknesses, threats and opportunities) analysis

Star Health raised Rs 3,217 crore from anchor investors ahead of the IPO.

Speaking on the anchor book, Subbarayan told CNBC-TV18 the insurer saw a good response from investors and collected around Rs 3,217 crore from anchor investors. “Some of the mark foreign investors as you mentioned include GIC, Abu Dhabi Investment Authority, Aberdeen  Morgan Stanley and  Society General, apart from foreign investors, and domestic investors include Edelweiss, SBI Life, Max Life, HDFC Life, IIFL and Bharti AXA… Many domestic investors have shown interest and we were able to do allocation based on the request. Now we are also seeing a very good response on the retail investor side,” he said. 

Roy said the company has been able to display a consistent vusiness performance over the past many years. “We are largely retail operators; 90 percent of our business comes from the retail segment so we are able to have healthy growth,” he said.

He, however, mentioned some distortion in the company’s claims ratio in the recent past because of the outbreak of the pandemic. “It has gone up but we expect that from the next year, once the pandemic comes under some kind of control, we will be back to normal rates,” Roy added.

He also said that Star Health has always been a profitable company except in FY21 and in the first half of FY22. “We are a profit-oriented company; we have been making underwriting profits for the last five years. The impact of the first half of FY22 was very, very severe so on a on a year-to-date basis, FY22 may not be profitable, but the second half will be profitable on a standalone basis. For the full year, it may not be,” said Roy, who expects the business to return to profitable rates in FY23.

For full management commentary, watch the video.

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