StarHealthtrades flat ondebut after tepid IPO
The insurer’s share closed 0.11% above its IPO price of ₹900 after falling as much as 8.1% earlier
MUMBAI: Star Health and Allied Insurance Company Ltd recovered the lost ground after a muted debut on the bourses on Friday and settled with a marginal gain over its issue price amid a sluggish broader market sentiment.
The stock, which opened the day on a negative note, managed to pare the losses and ended the session with a marginal gain of 0.11% at ₹901 apiece on NSE over the issue price of ₹900.
During the trading session, the stock witnessed an intra-day high of ₹940 and a low of ₹827.50 apiece.
In a similar fashion, the stock settled at ₹906.85 apiece on BSE, registering a gain of 0.76% over its issue price.
“Expensive valuations and dent in profitability due to Covid-19 were key concerns for the investors however the longterm outlook for the company is bullish thanks to the strong brand name and low penetration of health insurance in India,” said Parth Nyati, Founder, Tradingo.
On BSE, the company’s market capitalisation stood at ₹52,191.23 crore.
Star Health, a leading private health insurer, is owned by a consortium of investors such as Westbridge Capital and Rakesh Jhunjhunwala. It received a subscription of 79% on the last day of the IPO, which closed on December 2.
The insurer’s offer went through as portions set aside for both Qualified Institutional Buyers (QIBs) and retail investors were fully subscribed.
The issue comprised fresh issue of up to ₹2,000 crore and an offer-for-sale.
The price band was fixed at ₹870-900 per share.
The equity market was trading in red, with the 30-share Sensex shedding over 171 points to 58,635.67 points while the broader Nifty index declined over 37 points to 17,479.80 points.
Overall, Indian IPOs that have raised at least $500 million this year have risen an average 17% on their first day of trade, data compiled by Bloomberg show. Of the 10, half notched a first-day gain, including food delivery startup Zomato Ltd. and beauty retailer FSN E-Commerce Ventures Ltd.
Still, others remained skeptical about Star Health’s prospects. While premiums are rising given that health insurance is more of a protection product, claim ratios are also increasing, according to Deven Choksey, a strategist at KRChoksey Investment Managers.