Rakesh Jhunjhunwala-owned Star Health and Allied Insurance Company’s stock has corrected in-line with benchmark indices so far this year. Star Health Insurance shares have tanked 10 per cent so far in 2022. The scrip was quoting at Rs 698 on NSE intraday, down 22 per cent from its issue price of Rs 900. Despite the recent fall in Star Health share price, analysts are bullish on the counter with suggestions to buy the dip. Rakesh Jhunjhunwala is the promoter of Star Health and Allied Insurance Company, and owns 10.08 crore shares or 17.5% stake in the company along with wife Rekha Jhunjhunwala. Star Health shares are currently available at 27 per cent discount from all-time share price of Rs 940 apiece.
“Star Health and Allied Insurance Company is present in 25 states and 5 UTs of the country and provides various health insurance plans for individuals, senior citizens, and families in India. Stock prices are trading with Lower-High formation and trading above the 50 DEMA suggests the more upside in the prices. The company is backed by strong growth in retail health and total revenue of the company is continuously rising from the last four quarters,” said Akhilesh Jat, Category Manager – Equity Research, CapitalVia Global Research. Investors should buy the stock at Rs 710 with SL at Rs 575 and target price at Rs 900 per share, he added.
Star Health Insurance: Should you buy the dip?
Motilal Oswal: Buy
Target price: Rs 840; Upside: 22%
Domestic 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 22 per cent potential upside from 13 June closing price. The brokerage believes that the company is backed by strong growth in retail health, healthy earnings growth led by normalization in the claim ratio and limited cyclicality risk. “We upgrade our FY23/FY24 earnings estimate by 6.6 per cent/5.5 per cent respectively driven by profitable business mix,” it said. However, even if it rallies as much as expected, it will still remain below the listing price and far from the IPO price as well.
Target price: Rs 825; Upside: 20%
Analysts at ICICIDirect Research are also bullish on the counter and maintained a buy rating on the stock with a target price of Rs 825, hinting towards a potential 20 per cent upside in the counter. Star Health is expected to maintain its leadership in the retail health segment with sustainable long term growth opportunities, they stated. “Premium growth at 20-23 per cent CAGR and focus on underwriting profit is seen keeping RoE ahead of peers,” the report said. The brokerage sees under penetration, market leadership in new products, subsiding Covid claims to boost profitability and continued focus on strengthening agency channels along with digital tie-ups to boost business growth as the key triggers for the counter.
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