Rakesh Jhunjhunwala Shares: Rakesh Jhujhunwala-owned stock Star Health and Allied Insurance Company jumped 10 per cent to Rs 768 on the BSE in Wednesday’s intra-day trade. The general insurance company has rebounded 64 per cent from its record low of Rs 469.05 touched on July 1, 2022. 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.
Rakesh Jhunjhunwala Stake
Star Health stock forms part of ace investor Rakesh Jhunjhunwala’s portfolio. He is a promoter of the company. Jhunjhunwala (14.4 per cent) and his wife Rekha Jhunjhunwala (3.11 per cent) held 17.51 per cent stake in the firm as of the 31 March 2022 quarter, according to the shareholding pattern data. In terms of number of shares, the stake translates into 100,753,935 shares of the company. Of the total number of shares, Jhunjhunwala holds 82,882,958 shares and his wife has 17,870,977 shares. Star Health made its stock market debut in December last year, and has corrected 46 per cent from its issue price of Rs 900. 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.
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 a dent in profitability on account of Covid-19.
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).
With the massive return in the past one month amid volatility in the market, the insurance share, one of the stocks in Rakesh Jhunjhunwala’s portfolio, has been able to beat the estimates of ICICI Securities.
The domestic brokerage, in its report on July 3 earlier this month, had assigned a buy rating on the counter with a target price of Rs 700 per share in one year, which has been met by the stock in less than one month.
The jump in the share price of the insurance firm comes amid positive recommendations of the sector in general by brokerages.
“Retail health is a high growth business with high entry barriers. This is proved by the fact that retail health premiums have grown by 20 per cent CAGR over the last 5 years and no player has been able to grow its market share meaningfully apart from Star Health and Care Health over the last 5 years,” ICICI Securities had said in its report.
In such an industry scenario, STAR is a distant market leader in retail health (31 per cent as of FY23-TD based on monthly GDPI data released by General insurance council) and well entrenched with 550k agents, 12,820 network hospitals and 807 branches, said the brokerage.
Recommending a buy on the stock, it had said that the high share of PSU insurers with low solvency continues to provide a growth opportunity for strong players like Star.
“Our estimates factor lower end of the earnings estimates. We believe the fear of business impact on life insurers selling retail health indemnity is overdone. Maintain BUY,” it added.
As per the latest corporate filings, the Big Bull of the Indian market Jhunjhunwala holds 32 stocks in the quarter ended June ’22. The value of the stocks in Rakesh Jhunjhunwala and Associates has been pegged at a little over Rs 30,073.6 crore by stock market analysis portal trendlyne.com.
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