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Shares of Star Health and Allied Insurance Company (Star Health) continued to reel under pressure and hit a new low of Rs 488.55, down 2 per cent on the BSE in Thursday’s intra-day trade. The stock of general insurance company quoted lower for 12th straight trading day, and has slipped 31 per cent from Rs 703.35, touched on June 14, 2022, during the period.
Star Health made its stock market debut on December 10, 2021, and has corrected 46 per cent from its issue price of Rs 900 per share. The stock has also shed 48 per cent from its record high level of Rs 940 that it had touched on the day of listing.
Ace investor Rakesh Jhunjhunwala is the promoter of Star Health. Data shows that he (14.40 per cent) and his wife Rekha Jhunjhunwala (3.11 per cent) collectively held 17.51 per cent stake in the insurer as of the March 2022 quarter.
Star Health, the largest private-sector health insurance company, had received a poor response for its Rs 7,250-crore initial public offering (IPO) due to expensive valuations, and dent in profitability on account of Covid-19.
However, the management expects retail health segment to clock 20-25 per cent CAGR over the next two-three years. The key growth drivers will be increased focus on lower-tier cities, tie up with new banca partners, with an aim to double their share to 8 per cent in FY23.
Analysts at Motilal Oswal Financial Services remain optimistic about the overall prospects of Star Healthcare, backed by strong growth in retail health, healthy earnings growth, and limited cyclicality risk.
“Overall, Star Health remains an attractive story in the sunrise sector. In our view, 1-2 quarters of profitable growth delivery will likely lead to a material outperformance of Star Health’s shares. The recent steep fall in the share prices provides an attractive entry point,” said those at Emkay Global Financial Services in a company report.
Moreover, analysts also suggest investors remain positive on the retail health insurance business in India. They believe that the possible entry of life insurers into health indemnity would mean a little extra competition and would augur granular distribution instead of reliance on one large distributor.
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