Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company made a poor listing on the bourses on Friday, as demand from investors for the initial public offering (IPO) was weak owing to concerns over valuations and near-term profitability.

The stock opened at Rs 848.8 on the BSE, a discount of 5.69% against its issue price of Rs 900. On the NSE, the stock got listed at Rs 845, a discount of 6.11%. The stock closed at Rs 906.85 with total market capitalisation of Rs 52,191.23 crore.

Prior to the listing, the company received a weak subscription in its three-day share sale between November 30 and December 2. The issue was subscribed only 79% as institutional and HNI investors mostly skipped it amid high valuations. As a result, the company trimmed its IPO size to Rs 6,400 crore from Rs 7,249 crore.

Earlier this week, pharmacy company Medplus Health Services also reduced its offer size from Rs 1,638 crore to Rs 1,398 crore, trimming the OFS by Rs 240 crore, ahead of its IPO.

Star Health’s poor listing was in line with expectations as the company’s near-term prospects remain a concern, said analysts. The company had reported an operating loss of Rs 1,071 crore in FY21. Further, the company saw a major impact due to the rising number of claims amid the Covid-19 situation and is likely to get impacted further if the country witnesses a third wave.

“Star Health has incurred losses in fiscal 2021 and for the six months ended September 30, 2021, and may incur losses in the future, which could adversely affect its operations and financial conditions and the trading price of shares,” HDFC Securities said in an IPO note.

On the other hand, Rakesh Jhunjhunwala, one of the promoters holding a 14% stake, has made a profit of more than Rs 6,000 crore as the company got listed on the exchanges. The ace investor had invested in the company between 2019 and 2020 and acquired nearly 7.68 crore shares at an average price of Rs 156.28 per share. However, Jhunjhunwala did not participate in the OFS during the offer.

S Prakash, managing director, Star Health and Allied Insurance Company, said: “We have paid more than 80 lakh claims in the journey of 15 years and we are very confident that we can continue to focus on powerful claim settlement and on acquiring more and more market share.”