Ace investor Rekha Jhunjhunwala lost over ₹500 cr in 1 day in insurance stock, falls by 8.5% on May 26 trade
3 min read 26 May 2023, 08:47 PM ISTGeneral insurance firm, Star Health nosedived on Friday by at least 8.5%. Ace investor Rekha Jhunjhunwala being the largest promoter of Star Health saw her shareholding value drop by over ₹500 crore in May 26th trade.
PremiumStar Health and Allied Insurance Company on Friday nosedived by nearly 10% on exchanges and even emerged among top underperformers. Due to the steep selloff, late market mogul Rakesh Jhunjhunwala's wife Rekha lost more than ₹500 crore in 1 day in Star Health. Rekha Jhunjhunwala is the largest promoter in the general insurance firm.
On BSE, Star Health's share price closed at ₹534.30 apiece down by ₹49.65 or 8.50%. The stock was near the day's low of ₹531.70 apiece. Overall, the stock saw a decline of 8.95%.
In the previous session, Star Health's share price stood at ₹583.95 apiece.
As per the latest shareholding pattern, as of March 31, 2023, Rekha holds 8,28,82,958 equity shares or 14.25% under her late husband Rakesh's name, while she holds another 1,78,70,977 equity shares or 3.07% in Star Health.
Together, her shareholding stands at 10,07,53,935 equity shares or 17.32% in Star Health.
At the current closing price of ₹534.30 apiece, Rekha's shareholding is valued at ₹5,383.28 crore on BSE. On the previous session's figures, her stake stood at ₹5,883.53 crore.
With that, Rekha lost approximately ₹500.25 crore in Star Health on Friday.
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The performance of Star Health's share price has been under pressure in the past one year.
Star Health stock has dropped by nearly 9% on BSE in a month, while its half-yearly drop as of now is over 17%. So far in 2023, the decline is nearly 9%. But in a year, Star Health shares have plunged by 19.5%.
A year ago, on May 26, Star Health stock was nearly ₹664 levels.
In Q4FY23, Star Health posted a net profit of ₹619 crore against a loss of RS 1,041 crore a year ago same quarter. Gross written premium of the insurer jumped by 13% YoY to ₹12,952 crore in the fiscal year FY23. Also, the company's retail health premium zoomed by 18% YoY to ₹11,948 crore with a market share of 34% as of March 31, 2023.
Earlier, in May, brokerages recommended buying in Star Health share price.
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Given levers for improvement in RoE – strengthening of distribution channels through banca tie-up, focus on profitable growth, elevated yields and issuance of Esop at market price, ICICI Direct Research remain positive on the fundamental strength of Star Health. Thus, the brokerage assign a multiple of 2x on FY25E GDPI and arrive at a revised target price of ₹700 from ₹650 earlier.
Meanwhile, as per Emkay Global's report, Star Health is expected to deliver claims ratio of 63-65%, owing to strong FY23 performance, price hike taken in its major policies, and Covidrelated impact largely behind. Claims costs are expected to further improve, driven by efficient claims processing systems in place, the shortest possible turnaround time, and efficient anti-fraud systems.
Also, Emkay's note added that Star should further see improvement in combined ratio as the price hike in key products and investments in distribution are expected to start delivering results. Star’s EoM is below the 35% limit as against peers, and this paves way for Star to grow better than its peers, given its strong franchise, widening network of hospitals, and expanding distribution channels.
Given that Star is within the 35% Expense of Management (EoM) cap, the company is well positioned in the new EoM regulations era. Hence, Emkay's note said, "we have tweaked our estimates for FY24-25E and reiterate our BUY rating with a revised Mar-24 TP of Rs685, implying a 32x FY25E P/E and 2.1x FY25E P/GWP."
