Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company disappointed the investors on Friday as the stocks got at Rs 848.8 on BSE, a 6.11 discount over its price of Rs 900 per share. At NSE, Star Health shared opened at Rs 845, a 6.11 per cent discount to its issue price.
Started in 2006, Star Health & Allied Insurance Company is one of the largest private health insurers in India with a market share of 15.8 percent in fiscal 2021. The insurance company aimed to garner Rs 7,249.18 through this maiden offer. Star Health IPO comprised of fresh issuance of shares worth Rs 2,000 crore and an offer for sale (OFS) of 5.83 crore equity shares by several shareholders.
Star Health IPO saw muted subscription from the investors during the offer period. Analysts pointed out high valuation behind the dampened sentiment at the IPO. Star Health IPO received bids of over 3.56 crore shares against the total issue size of over 4.49 crore shares, data available with the National Stock Exchange (NSE) showed. The shares allocated for the qualified institutional buyers (QIBs) was subscribed 1.03 times, while those of non institutional investors was subscribed 0.19 times and that of retail individual investors (RIIs) was subscribed 1.10 times. Separately, the portion for the employees’ segment was subscribed 0.10 times.
Abhay Doshi, founder at UnlistedArena.com earlier predicted a tepid listing for Star Health IPO considering the muted subscription during the offer. He mentioned, “As the D-Street is witnessing rain of IPOs, a mixed and selective subscription to different issues. Star Health Insurance received a very tepid response at the time when other IPOs are getting highly oversubscribed. The tepid response was mostly on account of higher pricing which made investors wary which may make its debut to a lack-lusture one. The shares may list at 5-10 per cent discount, disappointing the allottees.”
The company offers a range of flexible and comprehensive coverage options primarily for retail health, group health, personal accident and overseas travel. The retail health and group health accounted for 87.9 percent and 10.5 percent of its total GWP in FY21. In FY21 and first half of FY22, it had total gross written premium (GWP) of Rs 9,348.95 crore and Rs 5,069.78 crore, respectively. The retail health insurance will be a key growth driver for the health insurance industry in India especially after the COVID pandemic.