Star Health lists at six per cent discount; closes in green

This is the second time in quick succession when a large IPO is entering the public market at a discount.

Published: 11th December 2021 07:33 AM  |   Last Updated: 11th December 2021 10:39 AM   |  A+A-

Rakesh Jhunjhunwala (Photo | PTI)

Rakesh Jhunjhunwala (Photo | PTI)

By Express News Service

NEW DELHI: The country’s largest private health insurer Star Health and Allied Insurance, backed by ace investor Rakesh Jhunjhunwala, made a weak debut on the Indian exchanges on Friday, listing at a discount of 6% at Rs 849 on the BSE compared to its issue price of Rs 900.

This is the second time in quick succession when a large IPO is entering the public market at a discount.

Last month, Paytm, which had issued India’s largest IPO worth Rs 18,300 crore, entered the stock exchanges on Thursday at a discount of over 9% and the stock ended its first session 27% lower at Rs 1,564.

Shares of Star Health, however, recovered and touched a high of Rs 940 during the day. At closing, the stock settled at Rs 906.85, up 0.76% from its issue price.

The weak listing was in expected line as the IPO saw a tepid response and was subscribed only 79%.

Due to this, the firm had to cut its offer for sale size to Rs 4,400 crore from Rs 5,249 crore. This changed the total IPO size to Rs 6,400 crore instead of Rs 7,249 crore.

“Star Health Insurance IPO which is one of the big brands backed by big-name got a very poor response from all categories of investors especially QIB (qualified institutional buyer) because they didn’t show any interest because of expensive valuations, therefore, we are seeing a poor listing,” said Santosh Meena, Head of Research, Swastika Investmart. 

Add to it, the increase in the number of Covid-19 claims continues to have a negative effect on health insurance providers.

“We believe Star will continue to grow at a faster pace than industry. However, we find valuations at an expensive end from a near term perspective, not leaving much upside on the table. In addition, hospitalisation of non-covid cases could be a negative surprise in forthcoming months” said Aditya Birla Capital in a note to its investors. 

Meanwhile, Jhunjhunwala, who holds 14.98% stake in the company, made a profit of over Rs 6,500 crore when the stock touched its intraday high of Rs 940. He had bought 2,882,958 equity shares in the company. 


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