Business

Star Health IPO: Jhunjhunwala’s magic didn’t work, it’s not 100% even

Highlights:

  • According to NSE data, the issue was 79 per cent full till 7.00 pm on the last day.
  • Investors have bid for only 3,56,02,544 shares against 4,49,08,947 shares
  • The price band of Star Health IPO was Rs 870-900 per share and it opened on November 30.

Investors have shown reluctance towards the IPO of Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company, known as the Big Bull of the stock market. The issue which closed on Thursday was not even 100% filled. According to NSE data, the issue was 79 per cent full by 7.00 pm on the last day.

Investors have bid for only 3,56,02,544 shares as against 4,49,08,947 shares. The IPO has received over 75 per cent subscription which allows investment bankers to accept all bids for its listing and reduce the size of the issue offer. VCCircle reports that the company may reduce the size of the offers for sale.
Recently there have also been IPOs of Tega Industries and Anand Rathi Wealth Management which were completely filled. Star Health IPO 2018 is the first IPO which failed to get 100% subscription of its original issue size. The same happened with the IPO of ICICI Securities in 2018.

The price band of Star Health’s IPO was Rs 870-900 per share and it opened on 30 November and closed on 2 December. Experts were underestimating the company’s valuation. Although some experts have given it a long term subscription rating.
As of FY 2011, Star Health has a market share of 15.8% in the health insurance market. Rakesh Jhunjhunwala-backed company Kovid-19 is running in loss since the beginning and claims in its network have also increased. The increase in claims due to the pandemic was 30 per cent of the total net claims paid in FY2011 and 40.5 per cent in the six months ended September 30.

As of September 30, 2021, Star Health has a total of 779 branches in 25 states and five union territories. There are 562 Sales Manager Stations and 6,892 Internal Sales Managers in all these branches. Star Health distributes its policies largely through individual agents.

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