Star Health IPO: The three-day IPO, or IPO, of Star Health and Allied Insurance Company Limited has already reached its day 2 on Wednesday, December 1. The Star Health IPO was endorsed 0.12 times or 12 percent on its debut day with expert caution over its high valuation. The public offer therefore received a lukewarm response from investors on the first day of bidding. Star Health IPO received bids for 53.19 lakh shares against an IPO size of 4.49 crore shares at the end of Day 1 at the end of the day. Star Health had previously revealed that it had raised just over Rs 3,217 crore from anchor investors before opening the issue to the public. The Star Health IPO is the first to come close to bidding in December.
Details and Objectives of Star Health’s IPO Offering
Star Health and Alliance Company Limited is backed by top investor Rakesh Jhunjhunwala, Safecorp Investments India and Westbridge. The company plans to raise Rs 7,249 crore from its initial public offering which consists of a new issue and a sell offer. Of this, Rs 5,249 crore will be raised through the OFS with 58,324,225 shares to be sold by existing shareholders and promoters. The remaining Rs 2,000 crore will be a new issue.
Star Health IPO price band has been set at Rs 870-900 for one share, the company announced earlier. Investors wishing to invest in the Star Health IPO can bid on a minimum of 16 shares and in multiples of 16 shares thereof.
Star Health’s IPO aims to use the net proceeds to increase the company’s capital base and maintain the company’s insolvency level. The proceeds will also be used for general corporate purposes.
Star Health IPO Subscription Status
As previously mentioned, Star Health’s IPO was subscribed 12 percent or 0.12 times at the end of the day, amid lukewarm response from investors. Employees booked 30,672 shares against the Rs 100 crore of shares reserved for them, while private investors subscribed 64 percent of the share reserved for them. Non-institutional investors bid on 1.38 lakh shares of the portion set aside for them, while qualified institutional buyers bought 41,648 shares of the portion set aside for them.
Star Health IPO GMP, Financials
Star Health IPO raked in a premium of Rs 15 on Wednesday against the top end of the Rs 900 price range, according to IPO Watch. Star Health IPO’s low gray market premium indicated a poor performance during the Star Health IPO listing on the stock markets later in December.
In FY19-21, Start Health reported rapid business growth, but profitability was primarily impacted by higher claims due to the COVID-19 pandemic. Following a 27.5 percent CAGR growth in the number of policies issued, the company has reported a 31.4 percent increase in gross premiums, which came in at Rs. 9,349 crore in FY21.
Star Health IPO Rating, Should You Subscribe?
HEM Effects: The company is launching the issuance at a price range of Rs 870-900 per share at an mcap/gwp multiple of 5.5x and an mcap/net premium earned multiple of 10.31 on a FY21 basis. The company is the largest private health insurer in India with leadership in the retail health segment and has one of the largest and well-diversified distribution networks in the health insurance industry and an integrated ecosystem. The company’s focus on risk management with domain expertise ensures a superior claim rate and quality customer service. The company’s significant investments in technology and innovative business processes have demonstrated superior operational and financial performance. However, to account for volatile market conditions and valuations, we recommend that you “Subscribe” at issuance for long-term purposes.
Religare Broking: Star Health will benefit from positive industry growth trends, given its leadership position in the attractive retail health segment. It has one of the largest and well-distributed distribution networks in the health insurance industry and an integrated ecosystem. It offers a range of flexible and comprehensive coverages. The company’s financial performance was impacted by the pandemic in FY21. In the future, it aims to strengthen its market leadership by leveraging its strong brand. It aims to strengthen existing distribution channels and develop alternative channels. It also plans to focus on product innovation and provide value-added services. In addition, the investments in digitization would help the company achieve higher operational efficiency and better customer service.
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