Rakesh Jhunjhunwala’s portfolio stock has all buy ratings, but target below issue price

New Delhi: One of the latest debutants from Rakesh Jhunjhunwala’s portfolio, , is not in the pink of its health.

The scrip settled 2 per cent lower at Rs 701.15 on BSE on Friday. It is down about 22 per cent from its issue price of Rs 900, whereas if compared to its highest price of Rs 940, the counter has taken a hammering of more than 25 per cent.

Despite the recent fall in shares of Star Health, market analysts are bullish on the counter with suggestions to buy the dip. However, their target prices are quite below the issue price of the stock.

As of March 31, 2022, Rakesh Jhunjhunwala and his spouse, Rekha Jhunjhunwala, cumulatively held 10.08 crore or 17.51 per cent stake in the company, making it the second largest holding in Big Bull’s portfolio. The stake is worth about Rs 7,066 crore.

Brokerage firm

remains optimistic about the overall prospects of Star Health with a target price of Rs 840 on the counter. This indicates an up to 20 per cent upside in the stock.

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 added.

Star Health is the largest and only listed standalone insurer engaged in the health insurance segment, with a market share of 33 per cent in the retail health insurance segment, as of March 2022.

Star Health has 807 branches and 12,000+ network hospitals, with a presence in 25 states and five union territories of the country. Star Health reported continuance of healthy premium growth.

Another brokerage firm ICICIDirect Research is also bullish on the counter and has maintained a buy rating on the stock with a target price of Rs 825, hinting towards a potential 18 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, it said. “Premium growth at 20-23 per cent CAGR and focus on underwriting profit is seen keeping RoE ahead of peers.”

ICICIDirect 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.

As an alternative to the stock, ICICIDirect has suggested investors to buy

with a target price of Rs 670. “It is among the most dominant players in the Indian life insurance industry,” it said.

In early May, global brokerage CLSA firm had maintained a buy rating on Star Health with a target price of Rs 711.35.

The Jhunjhunwala duo are also among the promoters of the company which had launched its initial stake sale in November 2021 between Rs 870-900 apiece and made its debut on stock exchanges in December 2021.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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