Rakesh Jhunjhunwala’s wealth dips nearly ₹327 cr on this medical insurance firm in 1 day. Do you have to buy?

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Rakesh Jhunjhunwala faced a heavy loss in his general insurance firm, Star Health and Allied Insurance Company on Monday. After giving double-digit growth last month, Star Health shares began August on a bearish tone as investors booked profit. Star Health is the second biggest stock in Jhunjhunwala’s portfolio after Titan in value terms. The massive bull of D-Street can also be the promoter of the corporate. On Monday, Star Health shares dropped after the corporate’s financial performance announcement for the quarter ending June 30, 2022 (Q1FY23). Nevertheless, despite the present selloff, Star Health shares have strong prospects ahead as analysts give buy rankings as a result of the corporate’s product and distribution efforts which add confidence to its earnings potential.

On Monday, Star Health shares settled at 710.20 apiece down by 32.45 or 4.37% on BSE. The shares have touched an intraday low of 705 apiece and high of 765 apiece within the day. At the present price level, the corporate’s market cap is around 40,914.63 crore.

Last month, Star Health shares skyrocketed by nearly 57%.

As of June 30, 2022, Rakesh holds 8,28,82,958 equity shares or 14.39% of the corporate. He moreover holds 1,78,70,977 equity shares or 3.10% in Star Health through his wife Rekha Jhunjhunwala. Cumulatively, the couple holds 10,07,53,935 equity shares or 17.49% of the corporate.

Rakesh manages his and wife’s portfolio.

Because of Monday’s downfall, Rakesh’s wealth in Star Health declined by nearly 326.95 crore (100,753,935 X 32.45) in a single day.

As per Trendlyne data, Jhunjhunwala’s holding is valued at around 7,151 crore in Star Health as of August 1, 2022. By July 29, his shareholding was valued at around 7,528.3 crore in the corporate.

In Q1FY23, Star Health posted a net profit of 213.24 crore compared a lack of 209.78 crore in Q1FY22 and a loss 82.03 crore in Q4FY22. The corporate’s total income rose to 2,809.01 crore in Q1FY23 against 2,331.90 crore in the identical quarter last yr and 2,740.38 crore within the preceding quarter.

Do you have to spend money on Star Health shares post Q1?

Ansuman Deb and Ravin Kurwa Research Analysts at ICICI Securities said, “Star Health’s (Star) Q1FY23 result underlines strong business execution around product and distribution which give confidence on the guidance of outperforming the industry by way of retail premium growth and maintaining overall loss/combined ratio of 63-65%/93-95%, respectively. Distribution efforts span across channels including rural focus while product strategy uses latest designs, repricing in addition to hospital negotiations. The mixture of 32% retail health premium market share in Q1FY23 and overall strong retail medical insurance growth outlook make us constructive on Star.”

The duo added, “Maintain BUY with a revised goal price of Rs858 (Rs700 earlier) based on 40x FY24E EPS of Rs21.5 (earlier Rs17.6). We factor 19% premium CAGR between FY22-24E, combined ratio of 95/94% and investment yield of seven%/7.5% for FY23/24E, respectively. We have now upgraded our FY24 earnings to factor the renewed confidence by way of earnings potential seen in the corporate’s product and distribution strategy.”

 

Disclaimer: The views and suggestions made above are those of individual analysts or broking firms, and never of Mint.

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