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Rakesh Jhunjhunwala stock may rally 17% despite 22% fall since listing; buy, sell, or hold Star Health shares?

Rakesh Jhunjhunwala stock Star Health and Allied Insurance Company share price has fallen 22 per cent since listing in December last year.

Rakesh Jhunjhunwala, Star Health and Allied Health Insurance Company
Big bull Rakesh Jhunjhunwala is the promoter of Star Health and Allied Insurance Company, and owns a 17.5% stake in the company along with wife Rekha Jhunjhunwala

Rakesh Jhunjhunwala stock Star Health and Allied Insurance Company share price has fallen 22 per cent since listing in December last year. The stock was listed on BSE and NSE at Rs 848 per share, against the issue price of Rs 900. Currently stock trades at Rs 706 apiece. Despite the massive fall in the stock price, the research and brokerage firm Motilal Oswal Financial Services has pinned a ‘buy’ rating to the stock with a revised target price of Rs 840 apiece, implying a 17 per cent potential upside. However, even if it gains 17% it will still remain below the listing price and far from the IPO price as well.

Big bull Rakesh Jhunjhunwala is the promoter of Star Health and Allied Insurance Company, and owns a 17.5% stake in the company along with wife Rekha Jhunjhunwala. Rakesh Jhunjhunwala holds 14.4 per cent stake or 8.28 crore shares, while wife owns 3.11 per cent stake or 1.78 crore equity shares in the company.

Motilal Oswal remains optimistic about the overall prospects of Star Health and Allied Insurance Company backed by strong growth in Retail Health, given its under-penetration; healthy earnings growth, led by normalization in the claim ratio; limited cyclicality risk (commercial lines and Motor Insurance have high cyclicality). “We expect the gross premium to clock 25% CAGR and claim ratio to normalize ~64%, with a combined ratio of ~92% over FY22-24. We upgrade our FY23/FY24 earnings estimate by 6.6%/5.5% respectively driven by profitable business mix and maintain our buy rating on the stock with a revised TP of INR840 (based on 40x FY24E P/E),” it noted.

In the last one month Star Health stock price has fallen 1.15 per cent, and nearly 9 per cent on a year-to-date (YTD) basis. The research and brokerage firm also said that to improve its claim ratio, Star Health is taking action against hospitals; increasing tie ups with hospitals, wherein it plays the role of claim scrutinizer; and improving the share of its preferred hospital network with agreed pricing. 

The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

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