Portfolio of Rakesh Jhunjhunwala: Star Health gets a buy, brokerages expect up to a 65 percent increase
The stock of Star Health Insurance was recently placed on the stock exchange. The Rakesh Jhunjhunwala-backed public offering had a quiet debut, with Star Health’s share price hovering around its price range of $870 to 900 per equity share since its first public offering. The insurance firm, according to stock market analysts, focuses on retail business (B2C) and is one of the most well-known brands in the Indian industry. The firm was stressed due to a larger number of claims during the Covid pandemic, but following the unlock activities, the company is projected to go back on track, and the stock price of Star Health might rise to $1500 in the next one to two years.
Avinash Gorakshkar, Head of Research at Prpofitmart Securities, advised positional investors to acquire this Rakesh Jhunjhunwala portfolio stock, saying, “Star Health Insurance Company is one of the well-known companies in the Indian industry.” It has an excellent claim disbursal track record and concentrates mostly on the B2C or retail market, which has a lot of room for expansion post-Covid. The business’s balance sheet is stressed because to significant Covid-19 claims, but the company is likely to record excellent quarterly earnings in the next quarters as a result of unlock operations.”
“The Indian retail health insurance industry is well-slated for a strong near 20% premium CAGR in the coming decades as penetration within the total addressable market (TAM) of 400 million continues to improve from the current abysmal level of around 12%,” said Avinash Singh, Senior Research Analyst at Emkay Global Financial Services, echoing Avinash Gorakshkar’s views. Age cohort pricing increases and re-pricing will likely account for half of the premium growth.”
“We anticipate Star Health’s GWP to enjoy a 25% CAGR through FY25,” Emkay Global’s Avinash Singh continued. The unit economics are exceptionally favourable – we anticipate a ROE of 18%+ when claims stabilise in a 66-67 percent band (after the Covid-19 hump), limiting the combined ratio at 94-95 percent. To get at our Mar’23E TP of 1135, we use a DCF model. We believe that premium valuations, which are rightly rooted to Star Health’s practically impregnable position in a high-growth market, should not discourage investors.”
“One should have a long-term view with reference to Star Health stocks as it is positioned to move up to 1500 levels in the next 18 to 24 months,” said Avinash Gorakshkar of Profitmart Securities. He encouraged investors to purchase this Rakesh Jhunjhunwala stock at current levels and maintain a ‘buy on dips’ approach on every 4% to 5% drop from present levels.
“Compared to its rivals, the company is valued 10-15 higher,” Ravi Singhal, Vice Chairman at GCL Securities, stated in support of a long-term holding in Star Health insurance shares. As a result, one should wait for the stock to correct, as it may return to 750 levels in the near future. Long-term investors should buy around the 750-800 level and hold the stock for the long term.”
On the 13th of December 2021, the NSE closed with a share price of approximately 888.
Livemint.com is the source of this information.
Emkay Global Financial recommends Star Health with a target price of Rs 1135.
In its research report dated December 13, 2021, Emkay Global Financial suggested a buy rating for Star Health with a target price of Rs 1135.
The Star Health study by Emkay Global Financial
Three considerations support our high-conviction buy on Star Health: 2) Star Health’s overwhelming market dominance (>3x nearest rival) in the sticky retail sector delivers network effects – a trinity of hospitals, consumers, and agents feed off each other in a virtuous cycle. Sub-scale rivals will find it difficult to breach this moat; and 3) we expect scale to boost margins. We expect Star Health’s GWP to grow at a 25% CAGR through FY25. Unit economics are exceptionally favourable; we anticipate a ROE of 18%+ when claims stabilise in a 66-67 percent band (after the Covid-19 hump), with a combined ratio of 94-95 percent. To arrive at our Mar’23E TP of Rs1,135, we use a DCF model. We believe that premium valuations, which are justified given STARHEALTH’s near-unassailable position in a high-growth market, should not dissuade investors.
With a Buy rating and a Mar’23 TP of Rs1,135 (+25 percent upside), we begin coverage on STARHEALTH. Our target price implies a 47x FY25E EPS valuation multiple and a 2.9x FY25 P/GWP.
Moneycontrol.com is the source for this information.
Star Health, backed by Rakesh Jhunjhunwala, finishes higher after being listed at a 5.7 percent discount.
Despite the firm being backed by billionaire investor Rakesh Jhujhunwala and listing at a discount after its initial public offering fell short of its aim, shares of Star Health & Allied Insurance Co. finished higher.
The stock was listed for Rs 849 per share, a 5.69 percent reduction to its initial public offering price of Rs 890 per share. As of 2:15 p.m., the stock had recovered all of its early losses and was trading at Rs 898 a share, up 0.9 percent from its IPO price. The stock closed the day at Rs 900.1 a share, up 1.13 percent.
After the issue was not fully subscribed, the bidding for the private insurer’s shares was prolonged. If an issue is sold using the mandated book building method, at least 75% of the net offer must be allocated to qualified institutional purchasers, according to market laws. If the minimum subscription for QIBs is not met, the firm will refund the subscription money.
Apart from retail, the QIB element of Star Health was fully subscribed. As a result, the offering was oversubscribed by approximately 93.11 lakh shares.
One of the promoters, Jhunjhunwala, did not dilute his ownership in the firm.
As a record year for Indian IPOs draws to a conclusion, investors are becoming more wary of the offerings. One97 Communications Ltd., the operator of the digital payments service Paytm, had one of the worst debuts ever by a major technology firm last month, as experts questioned its profitability and investors baulked at its lofty valuation.
According to Bloomberg statistics, Indian IPOs that raised at least $500 million this year rose an average of 17% on their first day of trading.
Bloomberg.com is the source for this information
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