Ace investor Rakesh Jhunjhunwala backed Star Health and Insurance made a weak debut in the market on December 10, after it got a mild response from the public garnering over 79 per cent of the subscriptions to its initial public offering.
The Shares were listed at Rs 845 on the National Stock Exchange with a discount of 6 per cent to its listed band price of Rs 870-Rs900. Along with it, the shares opened at Rs 848 at the Bombay Stock Exchange (BSE) with a discount of over 5 per cent. The company announced that it’s going to fetch Rs 7, 249 crores at the upper end of the price band. However, it garnered just 79 per cent subscription only.
Following the company got a mild response to its Initial Public Offering last week and had to cut its IPO size to Rs 4,000 crores from Rs 5249 crores. Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala owns a nearly 15 per cent stake in the company, however, they did not put up any shares for sale in the IPO.
According to SPTulisan.com, Star Health’s IPO failed to get fully subscribed, despite an extended subscription period signalling weak investor demand. The response can be a result of its inexpensive valuations which makes the risk-reward is unfavourable, especially after the new covid variant is detected. Hence, they feel the company will post losses into the year March 2023.
The company saw its profitability getting hit badly during the covid-19 pandemic impacted by higher claims. The company posted an operating loss of Rs 1,071 crores in FY 2020-21 as compared to a profit of Rs 360.8 crores in FY 2019-20.