BackRakesh Jhunjhunwala portfolio stock hits 52-week low. Should you accumulate?
Rakesh Jhunjhunwala portfolio: Primary issue of the company was richly priced and the high claim ratios during the pandemic had severely impacted the company, leading to diminishing investors’ interest
PremiumRakesh Jhunjhunwala portfolio: After weak listing on 10th December 2021, Star Health and Allied Insurance share has been nosediving continuously. On Monday, Star Health share price hit a new life-time low of ₹511 apiece on NSE. Earlier, on Friday and Thursday too, this Rakesh Jhunjhunwala stock had hit fresh 52-week low. Comparing the Star Health share price today with Star Health IPO price band of ₹870 to ₹900 per share, this Rakesh Jhunjhunwala portfolio stock has corrected to the tune of 43 per cent that may attract positional long term investors.
According to stock market experts, this Rakesh Jhunjhunwala-backed company has turned loss making due to Covid-19 pandemic. Apart from this, higher price of the stock was also a reason for weak listing and further sell-off. They said that current dip in Star Health shares is a big opportunity for long term buyers. However, they advised positional investors to wait and buy around ₹455 to ₹475 levels as the stock may further correct from current levels.
Speaking on Star Health share price tumble, Punit Patni, Equity Research Analyst at Swastika Investmart said, "Star Health is a leading health insurance player in India having a market share of 32 per cent in the retail segment and 14 per cent in the overall health insurance business. The company has a long runway of growth due to low penetration of health insurance in India, rising out-of-pocket expenditure, inadequate financial protection for unfavorable health occurrences, and increased awareness and affordability. The company's singular emphasis on health insurance products allows it to create innovative products and deliver excellent customer service. The company has plans to improve its distribution network by focusing on BANCA & digital channels, improving claim ratio, optimizing OPEX, and keep on introducing innovative products to enhance its profitability. However, investors must be aware of the competitive nature of the industry and being in a mono-line business, the company is subject to black swan events like the Covid-19 pandemic."
Punit Patni went on to add that the primary issue of the company was richly priced and the high claim ratios during the pandemic had severely impacted the company, leading to diminishing investors’ interest. "Nevertheless, the correction provides an excellent opportunity to buy on dips for the long term and we expect the company to turn profitable in the coming years," Patni concluded.
Expecting further sell-off in this Rakesh Jhunjhunwala portfolio stock, Ravi Singh, Vice President and Head of Research at Share India said, "Star Health stock is in continuous downtrend amid slowdown in business and weak market sentiments. On technical setup, the current developments in the counter suggest more weaknesses in near term."
Sharing levels to buy Star Health shares, Ravi Singhal, Vice Chairman at GCL Securities said, "As we can see, the stock has been steadily declining since listing of its initial public offering. Revenue is also down after the pandemic decline phase. However, margins are also under pressure. Still, the stock appears weak; it has significant support near ₹450 levels. S0, one can buy between ₹455 to ₹475 maintaining stop loss around ₹419 for long term target of ₹675 per share."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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