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By Malvika Gurung
Investing.com — The recently-listed health insurance company Star Health and Allied Insurance Company (NS:) received a Buy coverage from brokerage firm Motilal Oswal (NS:), at a target price of Rs 750/share, an upside of 20%.
Ace investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together hold a 17.51% stake in the health insurer, which has not been doing very well since its listing on Dec 10, 2021, and has plunged 30% since then.
However, Motilal Oswal values the company at an estimated 40 times multiple FY24 EPS and expects it to report an estimated gross premium CAGR of 25% over FY21-24.
This is because Star Health is the first standalone listed health insurer in the country and holds a retail market share of 31% in the health insurance sector. Its nearest competitor holds a market share, three times lower than the company.
Motilal Oswal termed the Jhunjhunwala-backed stock a premium franchise, as it is a market leader in the still infant health insurance industry and is expected to grow at a relatively faster pace, given its unique proposition in the general segment, strong earnings growth prospects, and healthy RoE profile.
The brokerage also forecasts the company to sway from a loss of Rs 8.3 billion in FY21 to an estimated net profit of Rs 10.8 billion in FY24, as per news sources.
Brokerage Emkay Global (NS:) sees a 20% growth in the niche market over the next 10 years and believes that subscale competitors will struggle to outdo Star Health’s positioning in the nascent market.
As per CRISIL’s forecast, the health insurance industry is pegged to witness a CAGR growth of 18%/23%/15%/11% in the total/Retail/group/government segment over FY21–25, cited a Financial Express report.
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