Star Health IPO subscribed 20% on Day 2

On the other hand, the recent initial public offering of Policybazaar was subscribed two times on the second day, Nykaa got subscribed 4.82 times, and that of ICICI Lombard in 2017, a listed peer of Star Health Insurance, was almost fully subscribed on day 2.

Furthermore, expensive valuations and pricing have cautioned investors, after Paytm's poor show in November, which led to huge losses on the accounts of retail investors.
Furthermore, expensive valuations and pricing have cautioned investors, after Paytm's poor show in November, which led to huge losses on the accounts of retail investors.

The initial public offering by Star Health Insurance was subscribed just 20% on the second day of bidding on Wednesday, following a 12% subscription on the first day. The retail portion was subscribed 89% on the second day, while demand from qualified investors remained muted.

On the other hand, the recent initial public offering of Policybazaar was subscribed two times on the second day, Nykaa got subscribed 4.82 times, and that of ICICI Lombard in 2017, a listed peer of Star Health Insurance, was almost fully subscribed on day 2. However, Paytm shared a similar story with only 48% subscription on Day 2, mainly due to expensive valuations and pricing.

The insurance company aims to raise ₹7,247 crore via the issue at the upper price band of ₹900 apiece. Ahead of the bidding process, the firm had successfully garnered ₹3,217.13 crore from 62 anchor investors, allocating a total of 3,57,45,901 equity shares. Monetary Authority of Singapore, Government of Singapore, Abu Dhabi Investment Authority, Goldman Sachs (Singapore) Pte, and BNP Paribas arbitrage were among the top investors participating in the anchor book. Domestic investors included SBI Life Insurance Company, HDFC Life Insurance Company, and Edelweiss.

Investors are betting cautiously amid volatility in the markets caused by the new Omicron variant. It will further continue to impact both primary and secondary markets in the near term until a clear direction or a positive trigger hits the markets. Furthermore, expensive valuations and pricing have cautioned investors, after Paytm’s poor show in November, which led to huge losses on the accounts of retail investors.

According to KR Choksey, on the upper price band of Rs 900 and book value of Rs 63.6 for FY21, the price/book ratio works out to be 14.2x. Given the growth prospects of the retail health insurance sector and the company’s position as the market leader, the brokerage has found the valuation to be reasonable.

The company will list on the exchanges on December 10, and the issue will close for subscription on December 2.

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