Shares of Star Health and Allied Insurance Company are down over 34 per cent from its 52-week high of Rs 865.30, hit on January 18, 2022.
However, the Jhunjhunwala-backed stock is up over 22 per cent from its 52-week low of Rs 469.05, hit on July 01, 2022.
The stock is a part of late investor Rakesh Jhunjhunwala’s portfolio. Jhunjhunwala is a promoter of Star Health. According to the shareholding pattern data on BSE, he(14.33 per cent) and his wife Rekha Jhunjhunwala (3.09 per cent) held a 17.42 per cent stake in the firm as of the September quarter.
Anand Rathi remains positive on the business model and has initiated its coverage with a ‘Buy’ rating on the stock and a target price of Rs 723.
It expects the claims ratios to normalize. This should enable it to return to profitability over FY23-24E. It remains optimistic about the overall prospects of Star Health and expects overall gross premiums to grow a healthy CAGR over FY 22-24, led by Retail Health.
“Market share for SAHI(Standalone Health Insurers) companies increased from 10% in Fiscal 2015 to 26% in Fiscal 2021, it is further expected to increase by Fiscal 2025 as insurers increase their focus on retail business where SAHI have a market share of 46% and 49% as of Fiscal 2021 and the first six months of Fiscal 2022, respectively,” Anand Rathi said in its report.
It added that the net incurred claims under the health insurance business of general and health insurers stood at 6,33,610 million in 2021-22 reported an increase of about 56 per cent from the previous year. There is an increase in Incurred Claims Ratio (ICR) of health businesses from 94 per cent in 2020-21 to 109 per cent in 2021-22 and the growth is witnessed across all classes of health insurance business
“For H1FY2023, their retail health growth is 21% versus industries retail health growth of 14%, so they have grown one and a half times the industry’s growth rate. In Q2 FY2023, their retail health segment has grown by 21.7% versus the industry retail health growth of 17%. They have grown impressively at 1.3 times the market’s growth rate. Overall GWP(Gross written premium) grew by 11% in the Q2FY2023 over the same period of last year to Rs 31,890 million,” the brokerage firm said.