Shares of health insurer company Star Health and Allied Insurance even in a weak market were up by 2.68% at Rs. 655.05 at around 3:19 pm, while in intra-day trade shares gained up to 4% to day's high price of Rs. 664 per share on the NSE. Benchmark index meanwhile was down by 541 points at 57,323.
This is the second consecutive day of gains for the scrip after brokerage firm Motilal Oswal initiated a 'Buy' call on the counter for a target price of Rs. 750, implying an upside of Rs. 23% from the price at the time of recommendation of Rs. 609. Rakesh Jhunjhunwala backed firm made its debut on the bourses only lately on December 10, 2021.
As of December 2021 quarter, Rakesh Jhunjhunwala and his wife together own 17.51% stake in the company. In fact Rakesh Jhunjhunwala is the second biggest promoter in the company, the biggest being Safecrop Investments India LLP, which holds 41.19% shares in the insurer.
The 'Buy' call on the stock has been given on the expectations that the insurance company will report a gross premium CAGR of 25% over FY21-24E, going from loss of INR8.3b in FY21 to PAT of INR10.8b in FY24E. "At 32.5x
FY24E P/E, we find the valuations reasonable. We value the company at 40x FY24E EPS to arrive at fair value of INR750", mentions Motilal Oswal in its report.
Earlier ICICI Securities also suggested a 'Buy' on the counter for a target of Rs.806 as the brokerage sees good prospects for >20% premium CAGR in Indian health insurance space till FY30 on the back of: 1) structuralunder-penetration, 2) increasing consumer awareness and 3) rising affordability. Wesee STAR well placed to be one of the biggest beneficiaries of the same.
In the December quarter of Fy 22, the company posted total income from operations of Rs. 2710.97 crore, while its net loss increased both sequentially as well as YoY to Rs. 578.37 crore.
Star Health and Allied Insurance Company began operations in 2006 as the country's first standalone health insurance company. The company's offerings include health, personal accident and overseas travel insurance etc.