This Rakesh Jhunjhunwala-owned stock has surged 64% from July's record low

Star Healthcare rallied 10% to Rs 768 in intra-day today, and has rebounded 64% from its record low of Rs 469.05 touched on July 1, 2022.

Shares of Star Healthcare and Allied Insurance Company soared 10 per cent to Rs 768 on the BSE in Wednesday’s intra-day trade. With this, the stock of the general insurance company has rebounded 64 per cent from its record low of Rs 469.05 touched on July 1, 2022. 

However, despite its sharp recovery from the low level, Star Health was still trading 15 per cent lower against its issue price of Rs 900 per share. The company made its stock market debut on December 10, 2021. It had hit a record high level of Rs 940 on the day of listing.

In the past one month, the stock has outperformed the market by surging 48 per cent as compared to a 4.4 per cent rise in the S&P BSE Sensex.

Ace investor Rakesh Jhunjhunwala is the promoter of Star Health. Data shows that he (14.39 per cent) and his wife Rekha Jhunjhunwala (3.10 per cent) collectively held 17.49 per cent stake in the insurer as of the end of June 2022 quarter.

Star Health, the largest private-sector health insurance company, had received a poor response for its Rs 7,250-crore initial public offering (IPO) due to expensive valuations, and dent in profitability on account of Covid-19.

However, the management expects retail health segment to clock 20-25 per cent CAGR over the next two-three years. The key growth drivers will be increased focus on lower-tier cities, tie up with new banca partners, with an aim to double their share to 8 per cent in FY23.

The board of directors of Star Health is scheduled to meet on Friday, July 29, 2022 to consider and approve the unaudited and limited reviewed financial results of the company for the quarter ended June 30, 2022 (Q1FY23).

Q1FY23 may mark the return of a normal Q1 after a two-year gap in which Covid-19 (lockdown in Q1FY21 and Delta wave in Q1FY22) disrupted business growth and resulted in a spike in claims, said analysts. 

“In health insurance, we see the return of a normal quarter for Star Health, which is expected to post a combined ratio of 97 per cent and a profit after tax of Rs 200 crore. The overall premium growth for Star Health is likely to be slightly muted at 13 per cent, but retail premium growth is expected to be 17-18 per cent”, Emkay Global Financial services said in its insurance sector update.

With the impact of Covid-19 receding, the brokerage said it expects better profitability for Star Health on account of an improvement in the claims ratio and combined ratio. The company is on the constant move to exit from large unprofitable corporates, shifting its primary focus to the retail health segment, it said.

Meanwhile, on July 11, Star Health announced that the company and Common Services Centers (CSC), under the IT ministry, have partnered to provide over 5 lakh CSCs access to a select range of Star Health insurance products, specially designed to meet the needs of rural customers, across tier-II, tier-III cities and rural markets pan India.

This tie-up is a step towards increasing health insurance penetration in rural India. Concurrently, the added distribution network will help Star Health expand its market share and strengthen its presence across the country, the company had said.