Rekha Jhunjhunwala Portfolio: Rekha Jhunjhunwala’s portfolio stock Star Health and Allied Insurance has gotten a BUY rating and target price of Rs 675 per share.
Star Health is India’s largest standalone health insurer (SAHI) with a market share of 13 per cent as of 9MFY23 (33 per cent in retail health insurance) with built strong virtuous cycle through its market leadership position in agency network, retail health, and by having one of the largest hospitals networks, the report said.
“All these factors feed each other, creating very strong entry barriers for incumbents and new players, based on which we expect Star Health to remain a dominant player in the retail health space. As its loss ratio normalises to pre-covid levels, its combined ratio will improve, driving underwriting performance and profitability. We expect Star Health to deliver a revenue CAGR of 18% over FY22-25 and RoE of 14% in FY25,” the note stated.
“The virtuous cycle created by a strong agency network, market leadership in retail health, and a large hospital network should continue to help Star Health to capture the long-term growth opportunity in India’s health insurance industry,” said PhillipCapital. Key risk, as per brokerage, could be higher agency channel dependency, rising competition, higher than expected loss ratio and regulatory changes.
Earlier, CLSA upgraded Star Health and Allied Insurance Company to a buy and has also raised its price target to Rs 700 versus Rs 570 earlier. The key reason the firm has upgraded the stock is that the company has taken a 25 per cent price hike across 50 per cent of its book, including renewals. The company is also existing its loss-making group portfolio.
Jhunjhunwala Stake in Star Health & Allied Insurance
As per the recent shareholding pattern on the BSE, Rekha Jhunjhunwala holds 3.07 per cent stake in the company whereas late Rakesh Jhunjhunwala holds 14.25 per cent stake in Star Health as of December 2022. Incorporated in 2005, Star Health offers coverage options for retail health, group health, personal accidents and overseas travel insurance.
Earlier this month, in an interaction with CNBC-TV18, V Jagannathan, Chairman, Star Health & Allied Insurance said that the company has taken price increase in two key products: “Across the board, they (IRDAI) gave us the permission, which we have not done it. But after everything is settled down, we have taken that into account and the medical inflation, which is at least minimum 10-12 per cent.”
Jagannathan asserted that the FY 24 growth will be in the range of 16-17 per cent. “… and the growth will only be upward and profit also is expected to go towards the northern side rather than climbing down to southern side.”
Star Health and Allied Insurance Company is planning to foray into life insurance business with focus on protection products. For the same, the health insurance firm is likely to apply to Insurance Regulatory and Development Authority of India (IRDAI) for composite insurance license. Once approval is given, the firm will be able to look at creating complimentary product offering.
The insurance company also reported earnings for the December-ended quarter with gross written premium rise of 14.5 per cent and the net premium earned up over 13 per cent this quarter.
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