The public issue of Rakesh Jhunjhunwala-promoted Star Health and Allied Insurance Company was subscribed 12 percent on the debut on November 30.
It received bids for 53.19 lakh equity shares against an IPO size of 4.49 crore equity shares.
The offer size was reduced to 4.49 crore equity shares from 8.14 crores earlier after the company mobilised Rs 3,217.13 crore from anchor investors at the upper end of the price band of Rs 870-900 per share.
Retail investors have put in bid for 64 percent of their reserved portion, while the portion set aside for employees was subscribed for 30,672 shares.
Non-institutional investors subscribed for 1.38 lakh shares of their reserved portion, while qualified institutional buyers bought 41,648 equity shares of their reserved portion.
The company intends to garner Rs 7,249.18 crore through its public issue during November 30-December 2. The offer comprises a fresh issue of Rs 2,000 crore and an offer-for-sale of shares worth Rs 5,249.18 crore. The company will utilise the net proceeds from its fresh issue towards augmenting its capital base and insolvency level.
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Star Health Insurance is one of the largest private health insurers in the country with a market share of 15.8 percent in the Indian health insurance market as of FY21, with a total gross written premium (GWP) of Rs 9,348.95 crore in FY21.
“On the upper price band of Rs 900 and book value of Rs 63.6 for FY21, the P/B (price to book) ratio works out to be 14.2x for FY21. We believe that the company’s long-term prospects are promising,” said KR Choksey Research.
Also read: Star Health IPO opens on November 30: 10 key things to know before subscribing public issue
The brokerage further said retail health insurance will be a key growth driver for the Indian health insurance business in the near term. “Health insurance penetration in India is among the lowest globally, with only 10 percent of the population having insurance policies outside of government schemes,” the brokerage said.
“Growing awareness of health insurance products, increasing penetration, and, most importantly, retail insurance will be the next trigger for Star Health Insurance’s future growth,” said KR Choksey. It expects the company to maintain its strong growth momentum by increasing its market share and focusing more on underwriting quality.
Given the growth prospects for the retail health insurance sector and the company’s position as the market leader in the standalone health insurance sector, the company’s current valuation looks reasonable, said the brokerage. Hence, they have a ‘subscribe’ rating for the IPO.
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