Star Health and Allied Insurance Company’s first public offering (IPO) will close on Thursday, December 2. Investors have the last chance to book the first bid. Star Health and Allied Insurance, backed by veteran investor Rakesh Jhunjhunwala, is India’s first pure-play health insurance company. The company has set the price range at Rs 870 – 900 per share. Star Health IPO consisted of a new issue of Rs 2,000 crore and an offer for sale (OFS) of shares worth Rs 5,249 crore (5.8 crore shares) by promoters and existing shareholders. Interested investors can bid in multiples of 16 units. The company will not receive any proceeds from the OFS portion of the issue. The net proceeds from the IPO of Star Health and Allied Insurance Company will be used to increase the capital base, thereby maintaining the company’s solvency.
Star Health and Allied Insurance Company IPO Rating and Subscription Status
The IPO is valued at 14.9x FY21 book value, which appears to be a significant value
premium compared to ICICI Lombard and New India Assurance, which under
the listed space is present in the health insurance sector. So, most brokerage houses advised to subscribe to Star Health IPO cautiously and for long-term gains.
Star Health IPO was subscribed at 20 percent on the second day of bidding, backed by retail investors. The majority of bids come from retail investors, who have only a 10 percent quota at the IPO, versus 35 percent. The company previously said it had raised just over ₹3,217 crore from anchor investors ahead of its IPO.
Star Health and Allied Insurance IPO Gray Market Premium:
Star Health’s gray market premium was listed at Rs 15 on Dec. 2, according to IPO Watch. Star Health and Allied Insurance’s privately held shares traded on the gray market at Rs 150 on Nov. 24. However, Star Health and Allied Insurance’s IPO GMP has fallen significantly in the past week.
Star Health and Allied Insurance IPO: Company Profile
Founded in 2006, Star Health and Allied Insurance Company Ltd (Star Health) is one of the largest private health insurers in India with a market share of 15.8 percent in Fiscal 2021. The company mainly focuses on the retail health care market segment. It offers a range of flexible and comprehensive coverage options for retail health, group health, personal accident and overseas travel, accounting for 87.9 percent, 10.5 percent, 1.6 percent and 0.01 percent of the total, respectively. Gross Written Premium (GWP) in fiscal 2021. As of September 30, 2021, the network distribution includes 779 health insurance offices in 25 states and 5 union territories in India. Star Health has also built one of the largest hospital health insurance networks in India with more than 11,778 hospitals.
Star Health and Allied Insurance IPO: Should You Subscribe?
“As a result of the covid pandemic, awareness has increased in the health insurance industry and the health care retail market segment is expected to emerge as a key growth engine for the general health insurance industry in India. The health insurance industry has a strong positive outlook and as there are only two publicly traded general insurance companies in India, ICICI Lombard and New India Insurance, we expect Star Health to be a good option to invest for the long term,” said Ravi Singh, head of research. and Vice President at ShareIndia.
“Star Health differentiates itself from other independent health insurers (SAHI) in terms of size, strong growth rates (32% gross written premium CAGR over FY18-21) and improved operational performance, which is reflected in pre-Covid numbers for the company (93 percent combined ratio). At 5.5x FY21 Mcap/GWP, Star Health’s valuations are in line with recent deals in the SAHI space and appear reasonable given its positioning. Therefore, we recommend that you only enroll from a long-term perspective,” said Amarjeet Maurya – AVP – midcaps, Angel One Ltd.
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