Home / Markets / Stock Markets /  ICICI Securities sees strong upside in this Rakesh Jhunjhunwala portfolio stock
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Rakesh Jhunjhunwala portfolio: After sharp rise of 32.20 per share in Star Health Insurance share price on Thursday, Rakesh Jhunjhunwala's net worth in this stock surged around 325 crore ( 32.20 x 10,07,53,935) in single trade session. However, ICICI Securities is still bullish on this Rakesh Jhunjhunwala stock. They are of the opinion that Star Health share price may go up to 806 apiece levels from its current price of 641, logging near 25 per cent rise in long-term.

Speaking on the fundamentals that may fuel this Rakesh Jhunjhunwala stock; ICICI Securities said, "Star Health Insurance (STAR) is the leading health insurance player in India with 14%/32% market share in total/retail health insurance segment as of 10MFY22. A strong network of 0.53mn agents, more than 12,000 hospitals and 737 branches as of 9MFY22 makes STAR a dominant franchise in Indian health insurance with significant entry barriers."

The brokerage went on to add that it is further complemented by healthy financials (18 per cent PAT CAGR over FY16-FY20 and average RoE of 15.5 per cent over FY18-FY20) and strong management. While FY21/FY22 have been impacted by covid, we see good prospects for more than 20 per cent premium CAGR in Indian health insurance space till FY30 on the back of: 1) structural under-penetration, 2) increasing consumer awareness and 3) rising affordability. The ICICI Securities report said that they see STAR well placed to be one of the biggest beneficiaries of the same.

Expecting healthy business value over the time, the brokerage report added, "While business sensitivity to loss ratios will be high (as seen in FY21/FY22), the retail focus and growth expectations in new business (around 25 per cent of the book) should help maintain high profit and help STAR to maintain 12 per cent/17 per cent RoE over in FY23/24E."

On its suggestion to positional investors in regard to this Rakesh Jhunjhunwala portfolio stock, ICICI Securities said, "We value the stock at 806 (50x FY24E P/E and 8x FY24E P/B). These valuations are higher than average multiples for listed multi-line peer (Long term average P/E / P/B is 41x/7x) on account of the higher growth expectations in health segment where STAR has leadership position."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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