Shares of Star Health and Allied Insurance Company made a weak debut on Dalal Street on Friday, listing at a discount to the issue price on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
The shares of the Rakesh Jhunjhunwala-backed company got listed at Rs 845 per share on the NSE at a 6 per cent discount to its IPO issue price of Rs 900 per share. On the BSE, it debuted at a discount of 5.7 per cent to the issue price.
The stock recovered sharply just minutes after the weak debut, surging nearly 4 per cent to Rs 932 at 10:15 am. At around 11 am, however, the stock struggled again and remained just 0.07 per cent above its issue price. The stock was similarly positioned on the BSE.
The weak debut of Star Health and Allied Insurance Company did not surprise analysts as the company’s IPO had witnessed a weak response. The grey market premium also indicated a weak listing for the company.
Experts are of the view that Star Health Insurance’s IPO got a weak response due to expensive valuations and this could be the reason behind its poor listing on the stock exchanges. However, the long-term outlook for the company remains strong and the stock could see recovery over the long term.
Star Health and Allied Insurance Company is one of the largest private health insurers in the country with a market share of nearly 16 per cent in the overall health insurance market as of FY21.
One of the biggest strengths of the company is that it has a large distribution network in the health insurance industry. Its diversified product offerings with a focus on innovation and specialized products also gives it an additional edge. However, it suffered a huge blow during the Covid-19 pandemic and continues to face the threat of low profitability.