Big bull Rakesh Jhunjhunwala is the promoter of Star Health and Allied Insurance Company and owns a 17.5% stake in the recently listed company.
The Rakesh Jhunjhunwala promoted Star Health and Allied Insurance Company has not had a smooth journey in the stock exchanges since its listing so far. The stock is down 30% since its debut and hasn’t touched the IPO price since listing day. However, Motilal Oswal analysts have started reporting on Star Health and expect a 20% increase from current levels. Big bull Rakesh Jhunjhunwala is the promoter of Star Health and Allied Insurance Company and owns a 17.5% stake in the recently listed company. On Thursday, the stock traded at Rs 626 per share.
Target price can push stock 20% higher
Star Health has been named as a premium franchise by Motilal Oswal analysts. “Star Health, the market leader in the Indian health insurance industry, with a retail market share of 31%, is poised to grow at a relatively faster pace compared to the general health insurance industry,” the brokerage firm said in its report. initiation note. Going forward, Star Health is expected to report a gross premium CAGR of 25% for FY21-24E, ranging from a loss of Rs 8.3 billion in FY21 to a net profit of Rs 10.8 billion in FY24E. “We are valuing the company at 40x FY24E EPS to arrive at a fair value of Rs 750,” analysts said. This translated into an increase of 20%.
Huge opportunity ahead
Crisil estimates the health insurance industry is poised to see a CAGR of 18%/23%/15%/11% in the total/retail/group/government segment over FY21-25. Analysts at Motilal Oswal said the market’s strong under-penetration would be the main driver of growth, as only 3.5% of the population is covered by retail health insurance.
To capitalize on this growth, Star Health is seen as perfectly positioned, being the largest player in the retail health market with 32% market share and the second largest general healthcare player with 14% market share. Star Health has one of the highest numbers of retail health products affiliated with the IRDAI, giving it an edge over its competitors. Analysts at Motilal Oswal also emphasized that the company has people with extensive industry experience at its helm.
Star Health’s profitability is expected to improve in the future. The previous fiscal year was labeled an exceptional year for Star Health, with several one-off events denting performance. These include; the termination of the Voluntary Quota Sharing Reinsurance Treaty (VQST), leading to an impact of Rs 9 billion on NEP; the shift to the 1/365 calculation of the unexpired risk reserve versus the 50% method earlier, and finally high COVID claims. Claims ratio normalization from FY23 and continued improvement in expense ratio are expected to improve financial results.
This post Share price of Rakesh Jhunjhunwala, owned by Star Health and Allied Insurance Company, could rise 20% was original published at “https://www.financialexpress.com/market/rakesh-jhunjhunwala-backed-star-health-insurance-shares-may-rally-20-motilal-oswal-initiates-coverage/2463885/”