Star Health IPO: The three-day initial public offering, or IPO, of Star Health and Allied Insurance Company Limited has reached its Day 2 already on Wednesday, December 01. The Star Health IPO was subscribed 0.12 times or 12 per cent on its debut day amid caution from experts over its high valuation. The public offer, therefore received tepid response from investors on its first day of bidding. Star Health IPO, at the end of the day of Day 1, received bids for 53.19 lakh equity shares against an IPO size of 4.49 crore equity shares. Star Health had earlier revealed that it had raised a little over Rs 3,217 crore from anchor investors ahead of opening the issue for the public. The Star Health IPO is the first one to be close for bidding in December.
Star Health IPO Offer Details and Objectives
Star Health and Alliance Company Limited is backed by ace investor Rakesh Jhunjhunwala, Safecorp Investments India and Westbridge. The company plans to raise Rs 7,249 crore from its maiden public issue, which consists of fresh issue and an offer for sale. Of this, Rs 5,249 crore is set to be raised via the OFS, wherein 58,324,225 equity shares will be sold by existing shareholders and promoters. The remaining Rs 2,000 crore will be a fresh issue.
Star Health IPO price band has been fixed at Rs 870-900 for one share, the company announced earlier. Investors who want to invest in the Star Health IPO can bid for a minimum of 16 equity shares and in multiples of 16 shares thereof.
Star Health IPO aims to utilise the net proceeds to augment the company’s capital base and maintain insolvency level of the company. The proceeds will also be used for general corporate purposes.
Star Health IPO Subscription Status
As mentioned earlier, Star Health IPO was subscribed 12 per cent or 0.12 times at the end of day on Tuesday amid tepid response from investors. Employees booked 30,672 shares against the Rs 100 crore worth of shares set aside for them, while retail investors subscribed 64 per cent of the portion reserved for them. Non institutional investors bid for 1.38 lakh shares from the portion reserved for them, while qualified institutional buyers bought 41,648 equity shares of the portion set aside for them.
Star Health IPO GMP, Financials
Star Health IPO was fetching a premium of Rs 15 on Wednesday against the upper end of the price band of Rs 900, as per IPO Watch. The low grey market premium of Star Health IPO indicated poor performance during the Star Health IPO listing at the stock markets later in December.
Over FY19-21, Start Health has reported a rapid growth in the business, but its profitability was mainly impacted by higher claims arising from the COVID-19 pandemic. On the back of 27.5 per cent CAGR growth in the number of policies issued, the company has reported 31.4 per cent CAGR increase in gross premiums, which stood at Rs. 9,349 crore in FY21.
Star Health IPO Valuation, Should You Subscribe?
HEM Securities: Company is bringing the issue at price band of Rs 870-900 per share at mcap/gwp multiple of 5.5x & mcap/net premium earned multiple of 10.31 on FY21 basis. Company being the largest private health insurance company in India with leadership in the retail health segment has one of the largest and well spread distribution networks in the health insurance industry and integrated ecosystem. Company’s focus on risk management with domain expertise drives a superior claims ratio and quality customer service. Company’s substantial investment in technology and innovative business processes has demonstrated superior operating and financial performance. But looking after volatile market conditions & valuations , we recommend “Subscribe” on issue for long term purpose.
Religare Broking: Star Health stands to benefit from positive industry growth trends given its leadership position in the attractive retail health segment. It has one of the largest and well-spread distribution networks in the health insurance industry and an integrated ecosystem. It offers a range of flexible and comprehensive coverage. The company’s financial performance was impacted in FY21 due to the pandemic. Going forward, it intends to enhance its market leadership by leveraging its strong brand. It aims to enhance existing distribution channels and develop alternative channels. It also intends to focus on product innovation and provide value-added services. Moreover, the investments in digitization would help the company achieve higher operational efficiencies and better customer service.